Bitcoin dropped 1.05% to $33,862 on Wednesday, July 7. The price action hovered at $34,500 for 15 hours and started to trend sharply lower by the close. In Asian and European trading, the price fell to $32,077 amid risk aversion in the FX market.
This morning the dollar tried to seize the initiative, but failed, with the DXY slipping from 92.79 to 92.39. Meanwhile, gold jumped to $1,817 from $1,797. The cryptocurrency usually shows a delayed reaction to dollar dynamics, so we would not be surprised if bitcoin and ether revert to the upside.
The only countervailing factor is that the dollar has been falling sharply against the yen and the franc, but has risen strongly against the aussie and kiwi dollars. These antipodean currencies are risk appetite bellwethers, which means that the AUD and NZD should go up as the dollar index goes down.
The price action recovered to $32,607, although the markets remain tense and in state of turmoil. Cryptocurrencies are attempting to price in all the key events taking place in global markets (dollar appreciation and retreating equity indices). This evening, external conditions look buyer-friendly, while the scales are tilted to the sell side on the back of technical factors. In the short term, today we expect to see a correction to $33,500, although a move above that level looks questionable. For a breakout, an uptrend in the S&P 500, gold and a decline in the dollar index would be needed.