Bitcoin breaks horizontal resistance at the $32k area. The rally extended above $35k.

Bitcoin breaks horizontal resistance on the $32k space
The rally prolonged above $35k
Bulls ought to be fearful as a result of Bitcoin diverges from the US greenback

Bitcoin buyers are thrilled to see the cryptocurrency leaping to a brand new excessive for the 12 months. Extra exactly, Bitcoin traded above $35k for the primary time in over a 12 months. 

It did so by tripping stops seen within the $32k space. This space supplied resistance for fairly a while, and Bitcoin lastly broke above. 

That’s the excellent news for bulls. 

The dangerous information is that in doing so, Bitcoin diverges with the remainder of the fiat currencies. Extra exactly, whereas Bitcoin gained towards the US greenback, the dollar rallied towards its friends. 

It could or might not be one thing to fret about. But when I had been an investor in Bitcoin (which I’m not), I might fear. Right here is why. 

Bitcoin chart by TradingView

Bitcoin and the US greenback have diverged since Q1 2023

The issue for Bitcoin is that the greenback strengthened since Q1 2023 towards its friends. Two examples are the EUR/USD and AUD/USD alternate charges, which peaked within the 12 months’s first quarter. 

EUR/USD, as an illustration, peaked at 1.12 and now trades round 1.06. AUD/USD erased virtually all its positive aspects from the lows in October 2022.

Bitcoin is the final one standing towards the greenback. Whereas bulls could say that it is just regular as a result of Bitcoin just isn’t correlated with macro dangers and positioning, I urge to vary. 

Since Bitcoin is a part of many institutional portfolios, it does react to macro. Due to this fact, the rally we see right here would seemingly be reversed until the US greenback power dissipates. Provided that the greenback begins weakening it is smart to cheer for a Bitcoin rally. 

Till then, warning is required.