Bitcoin prices fell for the third consecutive session on Tuesday as a stronger US dollar countered the US Senate’s approval of a long-pending coronavirus stimulus package.
The flagship cryptocurrency plunged by 0.56 percent to $22,602 per token ahead of the London opening bell. Meanwhile, Bitcoin Futures on the Chicago Mercantile Exchange dropped 0.66 percent to $23,030, pointing to mildly higher bullish sentiment in the market despite recent setbacks.
There was some profit-booking noted during Bitcoin’s runup to its record high of $23,400 on Sunday. It also occurred as the US dollar edged up, helped by fears of an advanced coronavirus mutation in the UK that prompted a fresh round of lockdown and travel bans. The outlook pushed risk-on assets in Europe lower, thus helping the greenback.
Bitcoin Downside Targets
Bitcoin typically trades inversely to the dollar.
The cryptocurrency, therefore, risked plunging further lower into the week as the greenback sentiment flares up. Historically, the corrections that follow the BTC/USD exchange rate’s upside rallies target its 20-period moving average as support. Considering a fractal repeat, the pair is now targeting levels close to $20,000.
The prediction also draws cues from Bitcoin’s “overbought” levels on higher-timeframe charts. For instance, the Relative Strength Indicator reading on the one-week graph is near 81—which is way above the ’70’ threshold. The chart sees Bitcoin correcting to as low as $15,000 in the coming weekly sessions.
The US Senate voted Monday night in favor of the Congressional leaders’ $900 billion stimulus bill. It will now make its way to the White House, where the outgoing President Donald Trump will sign it into law.
Coupled with the Federal Reserve’s vow to keep purchasing government and corporate debts amid a low-interest environment, the stimulus package intends to make the US dollar weaker in the coming sessions. Meanwhile, hopes that the COVID-19 vaccine will be effective on the new virus strain would limit the greenback’s growth.
That aims to benefit Bitcoin as it heads into 2021 with a flurry of institutional investments. Some strategists see the cryptocurrency to hit anywhere between $100,000 to $400,000 as long as fiat depreciation continues and fears of higher inflation sustain.
“Looking at the increase of USD supply in the last 12 months and it’s the trajectory for the next 12, it’s easy to see that Bitcoin’s 2020 price increase isn’t as substantial as it looks, and the continued entry of institutions and sovereigns will dwarf anything to date.” — wrote Brendan Blumer, the co-founder/CEO of Block.One.