Bitcoin slides under $35K despite Biden unveiling $1.9 trillion stimulus

Positive reactions to a $1.9 trillion stimulus package combines to squash Bitcoin’s bullish sentiment.

Bitcoin (BTC) fell below $35,000 on Jan. 15 as renewed strength in the U.S. dollar piled pressure on the largest cryptocurrency. BTC bounced off support at $34,300 and is trading at $35,300 at the time of writing. 

BTC/USD 4-hour candle chart (Bitstamp). Source: Tradingvidw

Bitcoin heads back towards $30,000

Data from Cointelegraph Markets and TradingView showed BTC/USD hitting its lowest in over 24 hours at press time on Friday, with $34,000 so far acting as support.

The previous day saw the pair reclaim $40,000 for the briefest instant before falling back to range in a corridor which had formed at the start of the week. The latest drop reinforced the assumption that Bitcoin would continue in this corridor, which has $30,000 as support and $40,000 as a rough ceiling.

“#Bitcoin consolidating is very healthy for the market after the massive impulse move to $41,500,” Cointelegraph Markets analyst Michaël van de Poppe explained in a series of tweets.

“#Bitcoin is approaching a bounce area here as we rejected the crucial resistance around $40,000. Benefits the fact of further consolidation before continuation of the upwards momentum. Completely healthy.”

Halving analysis suggests “7X upside potential”

The fresh downturn for Bitcoin coincided with an uptick in the U.S. dollar currency index (DXY) coming on the back of President-elect Joe Biden’s $1.9 trillion coronavirus stimulus plan. Despite the gravity of this USD supply expansion, markets appeared to react favorably to the plans, leading DXY upwards at the expense of Bitcoin, to which it typically exhibits inverse correlation.

“Context: dollar is breaking out on multiple timeframes. quite a strong recovery at a multi-month support area. some argue this is bad for bitcoin, gold, and risk-on assets, hence the narrative,” Cointelegraph in-house analyst Joseph Young summarized.

BTC/USD (Bitstamp) vs. DXY (orange). Source: TradingView

Young noted that on derivatives markets, investors “buying the dip” was causing an extra headache, potentially dampening the prospects of a relief rally.

Zoom out, however, and Bitcoin was if anything underperforming compared to previous bull cycles. According to on-chain analytics resource Ecoinometrics, this left the door open for further conspicuous gains.

Bitcoin price post-halving comparison as of Jan. 15, 2021. Source: Ecoinometrics/ Twitter

“This bull market doesn’t stop at $40k,” part of a tweet with a comparative chart read.

“From the growth of the previous cycles we still have a 7x upside potential.”

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