not good news today for BTC

Today, there are no good news for Bitcoin: a price correction is underway that puts an end to a not very short period of lateralization. 

There are, however, no negative news that have triggered the correction, but only a normal market dynamic. 

The causes of the Bitcoin price correction: today’s bad news

The problem that is causing the correction actually originated on Friday, July 11. 

In fact, on Wednesday, July 9, a rebound had begun that should have brought the price of Bitcoin from $107,000 to $110,000, but instead it continued until July 12 when it reached $117,000. 

In fact, to tell the truth, on July 14th it recorded a final peak up to over $120,000, and then starting from the following day it moved sideways around $118,000 until yesterday. 

The fact is that this rebound should have ended on July 10 around the 110,000$ mark, but instead it continued for another four days, reaching the new all-time high above 123,000$.

That it was a mini-bubble, even if very contained, could have been clear from the start, but the fact that its burst stopped already the following day around $116,000, with a subsequent small rebound and lateral movement around $118,000, gave hope that the real correction might not even arrive. 

The price correction of BTC

In the end, however, the correction arrived. 

It should be remembered that the excessive rise in the price of Bitcoin began on July 11 when it exceeded $110,000, even though in the meantime the Dollar Index (DXY) has dropped a bit. 

From the first to the 15th of July, the Dollar Index rose from less than 97 points to almost 99. In theory, during that phase, the price of Bitcoin should have decreased, but instead, starting from July 11th, it began to rise a little excessively, riding the wave of the previous bull. 

It should be remembered that although the trend of the BTC price tends to be inversely correlated with that of the Dollar Index, in reality, this correlation almost always manifests only in the medium term, while in the short term it often does not manifest. 

This is truly a clear case, because for example starting from June 21, the Dollar Index began to fall, but the price of Bitcoin did not immediately react. In fact, the day before it had fallen, and only on the 24th did it react by rising. 

Subsequently, the Dollar Index started to rise from July 2, but the price of Bitcoin did not fall, precisely because it was still recovering the ground lost at the end of June. Therefore, it is as if from the second half of June the trend of the price of Bitcoin followed the trend of the Dollar Index with a few days’ delay (obviously in the opposite direction). 

And so the Dollar Index rose in the first half of July, and now Bitcoin is falling because it had previously risen excessively. 

The predictions on the price of Bitcoin after today’s bad news

It must be said, however, that if this “delay” dynamic of Bitcoin movements compared to the Dollar Index were to continue, the fact that starting from Friday, July 18, DXY has started to decline again could end up helping the price of BTC to rise, perhaps next week. 

In fact, there are several analysts who argue that the current decline of the Dollar Index could continue for a while longer. 

Currently, DXY is positioned around 97.5 points, but it could relatively soon drop below 97 points and aim for 96. 

Note that the 96 points are also currently the lower line of the ascending channel that has lasted since 2008, that is, for seventeen years. 

This very long ascent has ultimately favored US imports significantly, while at the same time disadvantaging exports, and this has ended up unbalancing the US trade balance considerably over all these years. 

The goal of Trump seems to be to reverse this trend, namely to reverse the ascending channel of the Dollar Index that has lasted for seventeen years, and perhaps start a new one either descending or at least lateralizing.

The bull run

Therefore, it is not a coincidence that the hypothesis circulating is that the medium-term goal is to bring the Dollar Index down to around 90, or at least to the levels of the end of 2020. 

However, it will not be easy, because at the time there was the largest QE in the entire history of the Fed, which inevitably ended up significantly devaluing the dollar. 

In the following years, and particularly in 2022, due to geo-political tensions, many investors rushed to buy dollars, considered a safe haven asset and easily spendable, and thus the Dollar Index resumed its bull run. 

It should be emphasized that if the Dollar Index were to fall significantly below 96 points and remain there for a while, the end of the ascending channel that has lasted since 2008 would be a historic event, of epic proportions for the financial markets. 

Furthermore, if it really should drop around the 90 mark by the end of the year, there is the possibility that the price of Bitcoin could end up reacting with a new great bull run, as has already happened every year following the US presidential elections since it has existed.