Bitcoin fights key trendline near $20K as US dollar index hits new 20-year high

Bitcoin (BTC), which was just below $20,000 on July 14, saw a new focus as the U.S. dollar strengthened to a two-decade high.

BTC/USD 1-hour candle charts (Bitstamp). Source: TradingView

DXY moves bring yen, euro into focus

Cointelegraph Markets Pro and TradingView data showed that BTC/USD recovered from lows caused by an unprecedented 40-year high in U.S. inflation according to the Consumer Price Index (CPI).

After briefly trading below $19,000, the couple took a flight over $20,000 before consolidating at that psychologically significant level.

Material Indicators is an on-chain analytics resource that provides material indicators. It was “do or die” for BTC price movement when it reached a key rising trendline since mid-June.

That trendline was at $19,600 on the day. BTC/USD is now supporting it.

Gut check time for #Bitcoin bulls fighting to the trend line. #FireCharts pic.twitter.com/AUJmKXClU9
— July 13, 2022 Material Indicators (@MI_Algos

Significant gains for crypto markets looked less likely due to the U.S. dollar ruling the day.

The U.S. dollar Index (DXY), which fell after the CPI print, returned to its former glory and posted its highest levels since 2002. This phenomenon had been a hallmark of much of the year.

The new peak was 108.64. This is a more than 1% increase over the 24-hour lows.

U.S. dollar Index (DXY), 1-hour candle chart. Source: TradingView

USD strength had a negative effect on risk assets and Bitcoin, as well as the short-term impact on other major currencies. BTC commentators were particularly focused on the Japanese yen.

“Yen is being battered once more today. Bank of Japan has frozen its assets, waiting for a Fed reversal. They will continue to destroy their currency until then,” the popular Twitter account Stack Hodler argued.

“BoJ + Yen gives us a glimpse at the future of ECB + EURO. Do you see why Bitcoin is important?

Cointelegraph reported that some think the Fed will also have to stop inflation-busting interest rates increases towards the end 2022.

“In response today’s CPI print, which showed broad-based and rapidly accelerating inflation,” short-term futures moved higher. The @federalreserve cut rates immediately after and then set rates at 2.9% per month. This was part of a Twitter thread that Bill Ackman, an investor and manager of hedge funds wrote.

“Implicitly, the market expects that a more aggressive Fed would push us into recession by the year’s end and then reduce rates in response.”

There is little belief in an altcoin resurrection

Altcoins are flat in the last 24 hours, but that is no reason to believe prices will drop further, according to one analyst.

Related: How Bitcoin’s strong relationship to stocks could cause a drop of up to $8,000

Il Capo of Crypto forecasted bearish movements for at least two tokens among the top ten cryptocurrency market caps in fresh updates.

Ether (ETH) threatened a return to a three figure price tag.

$ETH Testing the resistance of the ATH and forming a corrective movement. Bearish. Clean break below $1k = $600-700 pic.twitter.com/5qRscCVQ5G
— il Capo Of Crypto (@CryptoCapo_) July 14, 2022

Cardano (ADA), was in an even worse position after falling through support. The six-week-long testing had been repeated six times.

“Support broken, now tested as resistance. He commented that he was very bearish.

Santiment data revealed that an altcoin could rebound, despite having “dropped harder than others” this year.

The #8 market cap asset #Cardano is experiencing a 69% drop in price by 2022. This has caused social sentiment to drop more than others. In Jan, the sentiment was so negative that $ADA recovered +24% within 5 days. https://t.co/4BLpLNDraG pic.twitter.com/mJgnhtpB1V
— July 13, 2022 by Santiment (@santimentfeed). You should do your research before making any investment or trading decision.

https://cointelegraph.com/news/bitcoin-fights-key-trendline-near-20k-as-us-dollar-index-hits-new-20-year-high