Bitcoin price was stuck in a narrow range today, January 27. It was trading at $88,000, down by 10% from its highest point this year. It has underperformed gold, which has pumped to a record high. Also, it has slipped even as the US Dollar Index (DXY) has slumped to a record low.
Bitcoin Price Slips as US Dollar Index Plunges and Gold Soars
The US Dollar Index, which tracks the performance of the greenback against a basket of currencies, tumbled to the lowest level in four years. It has plunged against all major currencies like the euro, sterling, British pound, and the New Zealand dollar.
The dollar plunged as Polymarket data showed that odds of a government shutdown rose to 80% today. This shutdown is being triggered by the ongoing crisis on ICE and Border patrol. Democrats have insisted that they will only provide votes to fund the government if it is accompanied by reforms.
The dollar index has also plunged because of the ongoing surge in public debt. Data shows that the debt has surged to over $38 trillion, and the deficit means that it will keep rising by over $2 trillion a year. In a recent statement, JPMorgan’s Jamie Dimon warned that the situation was not sustainable.
These events have led to the ongoing gold price surge, which has pushed it past $5,000. Central banks and companies like Tether have continued buying gold, while the popular GLD and IAU ETFs have accumulated gold assets worth billions of dollars in the past few months.
In a recent interview, Tom Lee believes that Bitcoin and other cryptocurrencies are underperforming because investors have turned to the booming gold, silver, and stock market. He believes that historically, a surge often leads to strong gains in precious metals often leads to higher crypto prices.
He also blamed the performance to the ongoing deleveraging as evidenced by the falling futures open interest. Data shows that Bitcoin’s open interest has dropped from over $90 billion in October last year to below $50 billion today.
The next major Bitcoin news to watch will be the upcoming Federal Reserve interest rate decision. In theory, a dovish Fed should be highly bullish for Bitcoin and the crypto market.
BTC Price Outlook: Technical Analysis
Technical analysis suggests that Bitcoin price may have a strong bearish breakout soon. It is in the process of forming a bearish flag pattern, which is composed of a vertical line and an ascending channel.
BTC value has remained below all moving averages and the Ichimoku cloud indicator. Therefore, the most likely forecast is where it continues falling, with the next key target being at $80,480, its lowest level in November last year. A bearish breakout will then be followed by a rebound as Tom Lee expects.
Source: https://coingape.com/markets/bitcoin-price-outlook-as-us-dollar-index-hits-4-year-low-gold-soars/