Bitcoin, Ethereum, and almost every other asset on the planet trade against the dollar of its most liquid trading pair, and the greenback is the base currency on which all exchange rates are based. The power and influence of the almighty dollar are not to be underestimated, and the crypto market could soon feel the surprise stab of the global reserve currency.
A double bottom could be forming on the dollar with a hidden bullish signal that could hurt the currently overheated stock and crypto market. Here’s a closer look at the double bottom formation that could stop bitcoin’s bull market.
Double bottom forms on the dollar currency index
The dollar’s slow death has sent stocks and crypto assets like Bitcoin flying like never before, at a time when the economy was on hiatus and unemployment was rising. The stimulus money kept things alive while those who didn’t need the money for essentials bought shares in GameSpot and hundreds of thousands of DOGE.
Related reading | Broken Parabola: Mapping the Bitcoin Bull Market and More
Rising market capitalizations of assets everywhere have been a blatant sign that inflation is spiraling out of control, and the US government has taken steps to contain the situation. And Bitcoin has already taken a toll, causing the top cryptocurrency to come back down to $ 55,000.
Recent comments on “foam” in the stock markets, “risk appetite” and a casual SEC warning today that Bitcoin is a “highly speculative” asset are suspect in time.
At the same time, Adam and Eve’s double bottom could form on the DXY dollar currency index and he is poised to contain crypto profits.
Is an Adam and Eve bottom forming on the dollar? | Source: DXY on TradingView.com
Why Bitcoin Might Get In Trouble If The Greenback Bounces Off
An Adam and Eve Double Bottom is a rare structure that takes you to new heights. If that fails, the asset will fall even lower than the level of support that greenback bulls are trying to confirm as ironclad.
This type of double-bottom structure can also be found in Litecoin and other cryptocurrency price charts.
When the Bitcoin price chart is specifically overlaid on the same DXY price chart and the log MACD is enabled, the bearish trend change that could take place becomes clearer.
Bitcoin could be due for a reversal if the DXY rips higher | Source: DXY on TradingView.com
The last major rebound and bullish crossover in DXY was also the high point of the 2017 bull market. The dollar rebounded strongly while the first cryptocurrency sparked a bear market.
Related reading | The creator of the error-free top indicator says that despite the signal, Bitcoin is not done
This time around, the dollar is taking its sweet time to turn around, creating a short-term double bottom on top of the longer-term one that dates back to the last cycle.
There is also a hidden bullish divergence on the LMACD as Bitcoin suffers resistance, struggles with $ 60,000, and rare top signals have emerged. Is this the end of the Bitcoin bull run or is the dollar’s attempt to get back on its feet falling flat on its green back?
Featured image from iStockPhoto, Charts from TradingView.com