Bitcoin rejects $40K as US dollar strength hits 20-year high
Bitcoin (BTC) made a fresh bid to crack $40,000 on April 28 as Wall Street trading opened to twenty-year highs for U.S. dollar strength.
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hitting highs of $39,883 on Bitstamp before momentum waned, sending the pair $800 lower hours later.
Traders had predicted what they saw as a relief bounce, with the implication that the subsequent rejection would spark continuation of the downtrend.
On the day, caution was advised.
"BTC Currently consolidating in this falling wedge. In case of a breakout I'd be targetting $42K. It's good to wait for confirmation first if you decide to take the trade imo," popular Twitter account Daan Crypto Trades argued.
"Only a strong break and reclaim of $40.6k would make me look at higher targets," fellow trader Crypto Ed added.
With limited movement on Bitcoin itself, however, attention was fully focused on the dollar, which continued to outdo itself as the U.S. dollar currency index (DXY) hit its highest levels since 2002.
"The parabolic rally by DXY does not bode well for risk-on assets like stocks and Bitcoin. Until the rally cools off, playing defense is the way to go," commentator Benjamin Cowen warned.
Others agreed that DXY was now "parabolic," while trading guru Blockchain Backer saw similarities between the dollar's current setup versus other currencies and the period immediately after the March 2020 COVID-19 cross-asset crash.
U.S. Dollar Currency Index (DXY) is rising and parabolic.Started peeking at other currencies, and was looking at the Euro vs USD (EURUSD). And realized... I've seen this before. This was how the bottom looked in the crypto market before the big reversal happened after C-19. pic.twitter.com/M8uxBYZXX0
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