The cryptocurrency market faces turbulence as the dollar strengthens and the US elections approach.
The price of bitcoin experiences a significant pullback after reaching a resistance at $68,500. Currently, the most important cryptocurrency in the world is trading at $65,988, testing the support at $66,500. This decline occurs after bitcoin approached a liquidation zone, a phenomenon observed since it reached historical highs in March 2024. Electoral uncertainty would be weighing on the price of bitcoin.
Bitcoin faces price pullback as dollar strengthens amid US election uncertainty / TradingView
The dollar on the rise: A refuge in times of uncertainty
The US dollar shows a strong bullish momentum during October, driven by the uncertainty surrounding the US presidential elections. Investors, seeking safe haven, have closed risk positions, which pushed the DXY dollar index up to 104.49 points, from a low of 100.69 points at the beginning of the month. Besides the electoral uncertainty, there are other aspects that are also affecting bitcoin.
Federal Reserve Outlook and Market Impact
The latest economic data from the United States suggests an expanding economy, with the 2-year bond yield rising to 4.08%. This indicates that the Federal Reserve may not rush into significant interest rate cuts, opting for a moderate reduction at its next meeting in November. This strengthens the dollar and weakens its counterparts.
Internal Factors of the Bitcoin Market
Bitcoin's pullback is also influenced by the increase in profitable addresses, which reached 97.76% last Monday. This high percentage encourages profit-taking, contributing to the current decline. According to data from Bitcoinmagazinepro, the addresses in profit decreased to 94.97%. Typically, when Bitcoin addresses are in profit, almost 100%, significant price corrections occur due to profit-taking.
In addition, the total open interest of bitcoin futures fell by 2.48% in the last 24 hours, standing at $38.59 billion, according to Coinglass. Bitcoin ETFs also saw an outflow of capital of $87.90 million, after seven days of consecutive inflows.
Bitcoin movements on exchanges
Last Monday saw a significant outflow of bitcoin from centralized exchanges to self-custody wallets, reducing the balance from 2.43 million to 2.39 million BTC. However, in the last 24 hours, an inflow of 2,998.95 BTC was recorded to exchanges, which could indicate further price drops.
Despite the drop, bitcoin remains above the EMA25, suggesting a short-term bullish trend. The cryptocurrency is heading towards the dynamic support of this moving average, located at $65,020.
The cryptocurrency market is at a critical juncture, influenced by macroeconomic and technical factors. Investors should keep an eye on political and economic developments that could continue to impact the price of bitcoin.
Disclaimer: This article is for informational purposes only and does not constitute financial advice.