Bitcoin price falls below $ 60,000 as the Dollar Strength Index hits 16-month high

Bitcoin (BTC) is seeing its worst daily performance since September, when BTC price fell 10% to below $ 59,000 on Tuesday. On the flip side, the US dollar soared to a 16-month high after US retail spending tightened despite ongoing concerns over Covid-19 and inflation worries.

BTC price hit an intraday low of around $ 58,600 on Coinbase, only to pull back higher to reclaim $ 60,000 as psychological support. The downside comes when U.S. President Joe Biden signs a $ 550 billion infrastructure bill that introduces new tax reporting requirements for crypto users.

Some people have used yesterday’s news (Infrastructure Bill) to shake the tree and get some more cheap bags #bitcoin for themselves.

– David Gokhshtein (@davidgokhshtein) November 16, 2021

Stronger retail data

Meanwhile, the dollar continued its predominant upward momentum as U.S. retail sales rose 1.7 percent in October, up from 0.4 percent the previous month. This is further evidence – following an excellent report by Nonfarm Payrolls last week – that the U.S. economy has rebounded strongly from its Covid-19 lows.

As a result, investors raised their bids on the dollar in anticipation of the Federal Reserve’s $ 120 billion asset purchase program cuts.

The US Dollar Index (DXY), which measures the performance of the greenback against a basket of top foreign currencies, hit an intraday high of 95.821 on November 16, its highest level since July 2020. In contrast, Bitcoin is the compared to the environment, prices for 2020 and 2021, retreats have risen sharply.

More gains for the dollar

Analysts expect the dollar to continue rising in the coming months, with market analyst Scott Melker predicting the DXY will hit 97.50.

The core of Melker’s bullish outlook is the establishment of a “double floor”.

Specifically, a double bottom occurs when price makes two lows above a similar horizontal level to indicate a potential bullish reversal. Bullish confirmation occurs when price breaks a certain level of resistance – the high between two lows – to a target level along the length of the maximum height of the pattern.

So it looks like the US dollar index has broken out of a similar double bottom setup, as shown in the chart below.

Bitcoin struggles with mixed outlook

Bitcoin’s price more than doubled in 2021 due to mounting inflation concerns. Nigel Environmentally friendly, DeVere Team’s chief executive officer, noted that cryptocurrencies are likely to continue to appreciate in value through at least the second quarter of 2022, as the U.S. consumer price index (CPI) recently rose to a high level for three decades.

“These latest US data will only compound global inflation concerns as price pressures mount around the world,” he noted, adding:

“During this inflationary period, Bitcoin outperformed gold, which is hailed as the ultimate inflation hedge almost everywhere – by far.”

Vijay Ayyar, head of the Asia-Pacific region at Singapore-based crypto exchange Luno, has described the ongoing correction in Bitcoin, especially after the rally from 175% so far to USD 69,000, as a “healthy retreat”.

“It would be unusual to go further without correction,” he remarked.

On the flip side, Joel Kruger, a currency strategist at LMAX Group, says tighter Fed policies will begin to affect the broader market and hit the riskiest assets, a reason for Bitcoin stars and the rest of the crypto market to pull out . against the rising dollar.

Related: Bitcoin will peak at $ 253,000 this cycle, Ethereum at $ 22,000 if the halving repeats in 2016

Martha Reyes, director of research at Bequant, a digital asset company that describes Bitcoin as “a venture capital investment,” claims that people want to get cash out of these assets during times of stress.

Bitcoin is trading at $ 60.625 at press time.