US$ 20,000 range is in Bitcoin’s sights if prices beat key resistance.
The price of Bitcoin (BTC) has shown impressive strength in the past weeks and today the price has reached a new high in 2020, trading at $13,666.
This pack was a result of the weakness of the US dollar and many analysts believe that as long as the dollar remains weak, Bitcoin and other safe haven assets will perform well.
However, while Bitcoin shows strength, the altcoins are failing to follow suit and most altcoins are being sold against BTC. The Bitcoin dominance rate has increased in the previous weeks and this shows that the market dynamics is based on Bitcoin.
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Traders expect resistance between US$ 13,500-14,000
The weekly chart shows a clear resistance zone between $13,500-14,250 as the next major obstacle to the markets.
The price of Bitcoin has breached the $11,600-12,000 barrier as the obstacle to an upward movement. This discovery has caused the price to continue to rise toward the next hurdle, which is between $13,500-14,250.
The asset is not likely to make a breakthrough at once, as it is the first test of this resistance zone, but the overall weakness of the dollar is signaling that the price of Bitcoin should rise further.
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Weakness of the US dollar is driving Bitcoin’s rise
1-day graph of the U.S. Dollar Currency Index. Source: TradingView
The U.S. Dollar Currency Index (DXY) is showing significant weakness after the last test of the 94.6 point level was rejected instantly.
This rejection caused DXY to fall even further. More importantly, since the rejection on September 24th, the price of Bitcoin has started to rise.
This recovery increased the price of Bitcoin by $3,000, as it rose from $10,500 to $13,500. The correlation between DXY and Bitcoin has increased since the March crash and this is a reverse correlation.
If the dollar holds the 92.50 area for support, there is a potential likelihood of a reversal in the price of Bitcoin as well. This would mean a correction in the cryptomino markets, which is by no means pessimistic.
Market value still faces resistance
The total market capitalization of the cryptomaps is lagging behind the strength of Bitcoin, as BTC is the only one that shows strength. This means that the altcoins are having a drop in their BTC pairs, showing that Bitcoin is currently stronger than the altcoins.
Currently, the total market capitalization is in an important resistance zone, as the $400-410 billion level is a crucial support.
An advance in this resistance zone would mean that continuation to $520-530 billion is likely to occur.
A rejection here would mean a limited new construction, whereby the $280-300 billion areas are a significant support zone to be maintained.
Potential scenario for Bitcoin
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The main support for Bitcoin is now the $13,000-13,200 area for support. If this area confirms this support, the recent leak cannot be classified as a break from the top strip.
However, if the Bitcoin price denies the breakage above $13,500 and falls back into the range, it will be confirmed by a new breakage test of the $13,000-13,200 area.
If this scenario goes the way it should, new tests of $12,500 and potentially $12,000 or $11,600 are on the tables.
Obviously, such a move is lining up with a potential reversal in the US Dollar Currency Index and Bitcoin’s failure to exceed $14,000.
Once again, this retest will not be a low. It is very healthy to test previous resistance levels for support before continuation to the positive side can occur.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of the Cointelegraph. Every investment and trading movement involves risk. You should conduct your own research when making a decision.