Things may be shaken up in Bitcoin, especially as the US presidency is about to change hands.
Bitcoin (BTC) is again in familiar terrain as the week begins after a weekend spent in its latest, although high, trading hallway of more than $30,000.
Major Signals
- DXY keeps reversing losses
- Eth climbs past $1,200 again after a dip
- Bitcoin fundamentals strike new price highs
1. DXY: What are the chances of reversing losses?
The inauguration of President-elect Joe Biden comes as the strength of the U.S. dollar continues to rebound.
On Monday, the U.S. dollar currency index (DXY), which measures USD relative to a basket of major trading partner currencies, hit its highest level since Dec. 21.
The sustained upside in DXY tends to mean that Bitcoin growth takes a breather; this inverse correlation forming a conspicuous pattern throughout 2020. In the event, BTC/USD had little to lose during the latest gains, the majority of which were preserved despite huge volatility.
2. Stocks Have to Recline
On the markets, stocks showed indecisiveness as the week got underway, having calmed down from Biden's announcement.
Asia saw a mixed performance, and with Wall Street closed for Martin Luther King Jr. day on Monday, U.S. futures were just a tad higher from Friday.
The lackluster gains were curious for some, coming even though China had delivered Q4 economic growth statistics, which dwarfed any expectations.
As Bloomberg reported, the world's second-largest economy grew 6.5% during the quarter, making it the only major economy to avoid a coronavirus contraction last year.
3. All eyes on Altcoins
Also taking a breather in recent days is Bitcoin itself. After weeks of intensely volatile trading conditions, investors were treated to a quiet weekend, which also came as a welcome surprise to exchanges.
Previously, U.S. platforms Coinbase and Kraken had suffered outages at critical price points. The fellow trading platform eToro last week warned that it might have to limit Bitcoin buy orders should the weekend produce fresh volatility.
In the event, things were much quieter than anticipated, thanks to BTC/USD remaining rangebound with no real changes up or down.
Ether (ETH), the largest altcoin, was itself heading towards all-time highs, climbing past $1,200 again after a dip which saw it at one point lose $1,000 support.
With that, Bitcoin's market cap dominance was slipping further on Monday, reaching 66.3% compared to 69.5% at the start of the year.
4. Price action leaves all-time highs untouched
For the spot market, Bitcoin was steadily decreasing volatility as the week began. The past three days saw a narrowing of the trading range within the $30,000-$40,000 corridor, with a pattern of lower highs and higher lows known as compression taking over.
As Van de Poppe noted last week, this is a welcome sign that gives the market time to recoup the strength required for the compression structure's ultimate breakout. In Bitcoin's case, this should result in a push towards or even through current all-time highs of $42,000.
5. Bitcoin's network fundamentals hit fresh all-time highs
Just as bullish was difficulty, arguably the most important fundamental metric for Bitcoin, as it offers an insight into miner health and competitiveness.
After a 10.8% increase at the last automated readjustment on Jan. 9, difficulty hit a new record high of 20,607,418,304,385. Due in four days, the next readjustment will add another 6%, current estimates say.
