Dangerous Dollar Fractal Could Bring Return Of Bear Phase To Bitcoin

Tony "The Bull" Severino

1 year ago

3 mins read

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Bitcoin is trading at over $20,000, but the start of what might be the first real correction since the uptrend first began could be forming. However, looking more closely at the DXY Dollar Currency Index, the leading cryptocurrency by market cap could be in for another extended bear phase if a fractal on the dollar chart plays out.

Could fear related to the newest strain of the coronavirus and more potential lockdowns cause another Black Thursday-style flight to the dollar?

Bitcoin Safe Haven Narrative In Jeopardy If Greenback Momentum Shifts

2020 has been the year of the great search for the next safe haven. When the pandemic first struck, and panic took over markets, investors cashed out assets to the safest haven currently known to man: the US dollar.

As the global reserve currency and due to its general stability, it is considered a safe haven asset alongside the Swiss franc and Japanese yen. Outside of fiat and forex currencies, precious metals enjoy safe-haven status, and both gold and silver are shining examples – figuratively and literally – of strong performance during economic uncertainty.

But for the first time in history, Bitcoin was also part of the conversation surrounding safe havens, thanks to the cryptocurrency’s digital scarcity and attributes that make it an ideal store of value.

Gold set a new all-time early in the year, but after that, it has been all about Bitcoin. The cryptocurrency is up 500% in 2020 alone from the Black Thursday low, crushing the performance of all other safe-havens.

But with fear and uncertainty back because of a new, more contagious, mutant strain of COVID called VUI–202012/01 or lineage B.1.1.7, Bitcoin is already pulling back, and the dollar is reawakening, according to the DXY Dollar Currency Index.

$bitcoin btcusd dollar dxy fractal$

Bitcoin price action is layered behind the detailed technical chart of the DXY | Source: DXY on TradingView.com

The Dollar Emerges From Slumber, Could Send Crypto Back Into Bear Clutches

The DXY Dollar Currency Index is a basket of top global forex currencies weighted against the US dollar. The index does a solid job at providing a basic snapshot of the greenback’s strength or weakness.

2020 has not been a good year for the global reserve currency. More than 30% of all US dollars in circulation have been printed this year, and it has caused inflation fears to send chills up the spines of institutional investors.

It has turned many of them towards Bitcoin, which trades directly opposed to the dollar on its main base currency pair. But a fractal is forming on the DXY that could signal that the dollar is about to reverse, and it could possibly bring another bear phase to Bitcoin and crypto.

A nearly exact falling wedge pattern match what is forming now on the DXY broke up previously after a pair of hidden bullish divergences. The last major bull div and reversal in the greenback caused Bitcoin’s bear market from $20,000 to $3,200 while the dollar regained strength.

The dollar’s weakness in 2020 let the same asset run from $3,800 to $24,300 in under nine full months – what could a return to strength do to the cryptocurrency now that was supposed to be breaking out into a new bull run?

Featured image from Deposit Photos, Charts from TradingView.com

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

Tony is also celebrated for his literary contributions to the field. He is the author of the highest-rated Crypto Trading Journal on Amazon.com, a testament to his ability to communicate complex trading concepts in an accessible manner. This journal is widely regarded as an essential tool for traders aiming to track their progress and refine their strategies.

Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.

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