Bitcoin Weekly Outlook: A $20K Retest Likely as Dollar Hits 2018 Low

A remarkable rebound this weekend has put Bitcoin back en route to $20,000, its record high to date.

The flagship cryptocurrency still closed the week in red, down 1.28 percent on the whole. Many factors contributed to its decline, primarily profit-taking as its price logged a three-year high at $19,500. Meanwhile, rumors about US Treasury Secretay favoring regulations for private crypto wallets also accelerated the sell-off.

But the weekend saw Bitcoin shrugging off a portion of those concerns. The cryptocurrency pushed itself higher after finding concrete support inside the $16,200-16,500 range. It was trading about 15 percent higher from its previous week’s low as of Monday, pointing to another attempt at breaking $19,500 and retest $20,000.

And the fundamentals favor the scenario.

US Dollar Index Hits April 2018 Low

Today, the US dollar hit 91.69 against a basket of major foreign currencies, its lowest level since April 2018. A CNBC report noted that optimism in the COVID-19 vaccine, coupled with bets on more economic stimulus in the United States, pressured the greenback lower.

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The outperformance across the US stock market, with the S&P 500 posting its best month since April 2020, further pointed that portfolios would keep on holding riskier assets through their month-end rebalancing. That could also create a short-term downside pressure on the US dollar.

Bitcoin Weekly Outlook: A $20K Retest Likely as Dollar Hits 2018 Low

US Dollar Index breaks below its multi-year support trendline. Source: DXY on TradingView.com

A weaker dollar favors Bitcoin’s outlook. Its short-term risks create an ideal bullish setup for the cryptocurrency, especially as it adamantly waits for a $20k-retest. Bitcoin’s own fundamentals amid a dovish Fed and booming institutional adoption points to another record high in the making.

Bitcoin This Week

The Bitcoin market is starting this week on a positive note. As of 0650 UTC, BTC/USD was up 1.97 percent to $18,561. Its gains came especially after the Guggenheim Funds Trust filed an amendment with the US Securities and Exchange to put 10 percent of its reserves to Grayscale’s Bitcoin Trust.

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Guggenheim has net assets of about 4.97 billion, meaning it can now invest close to $500 million in BTC.

Bitcoin’s positive start this week also followed an opinion editorial on Bitcoin from Niall Ferguson, a prominent financial historian. The Bloomberg columnist favored the cryptocurrency’s “built-in scarcity” over the global central banks’ relentless money printing. He added:

“The dollar’s future weakness has been a favorite 2020 talking point for Wall Street economists such as Steve Roach. You can see why. There really are a lot of dollars around, even if their velocity of circulation has slumped because of the pandemic.”

Bitcoin Weekly Outlook: A $20K Retest Likely as Dollar Hits 2018 Low

Bitcoin is up more than 300 percent after the Fed announced its bond-buying program. Source: BTCUSD on TradingView.com

So it appears, Bitcoin’s ascent looks inevitable this week thanks to a weaker dollar sentiment short-term — and long-term, as well.

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