A full reversal and then some for BTC means that bulls are coming to terms with months of ground given up.
Bitcoin (BTC) hit its lowest level in over two months later on May 5 as Wall Street trading saw volatility return with a bang.
BTC/USD 1-day candle chart (Bitstamp). Source: TradingView
DXY celebrates as stocks, crypto tumble
Capping losses, which totaled 8.3% at one point, Bitcoin only bounced at a price last seen on Feb. 24 this year.
As Cointelegraph reported, the performance had come in tandem with mayhem in U.S. markets as equities gave up previous gains to flip bearish on the economic outlook. The Federal Reserve’s “priced in” rate hikes thus appeared to have been something of a red herring.
“BTC breaks below 37K after a nasty bull trap yesterday. Good lesson to many who continue to insist on fighting the trend,” popular trader Cheds reacted on the day.
At the time of writing, BTC/USD traded at around $37,000, having recouped a modest portion of the ground given up in the first two hours of the Wall Street session. Comparatively, the Nasdaq 100 was 4.5% down and the S&P 500 3.2%.
Even news that Blockchain protocol Terra had purchased a giant $1.5 billion of BTC to back its TerraUSD (UST) stablecoin failed to lift the mood.
“Can you imagine how disastrous this will be for central bank credibility (trust in the fiat system) if this equity market keeps unwinding in the coming weeks and they need to aggressively reverse policy within a month or two. Trust is already in shambles…,” podcast host Preston Pysh commented as relative stability returned.
The action was a boon for the U.S. dollar, meanwhile, as shown in the U.S. dollar index (DXY) reversing earlier losses to retest its highest levels in twenty years.
DXY stood at near 104 at the time of writing, up 1.2% on the day.
U.S. dollar index (DXY) 1-hour candle chart. Source: TradingView
Bulls feel the pressure most since January
Amid the chaos, previous bullish theories on BTC covering longer timeframes received a major test of their own.
Among them was that based on Bitcoin’s on-balance volume (OBV).
OBV, a cumulative volume measure used to identify buying and selling pressure, has, in fact, been calling for BTC price upside since the $32,000 lows in January, popular Twitter account IncomeSharks claimed earlier on May 5.
A series of higher lows since had given the impression that serious downside could be averted based on OBV data.
Here’s your #Bitcoin roadmap. OBV hasn’t one gone bearish since January. That’s where it said the bottom was in. We keep making higher highs and higher low. This is an uptrend after a correction. https://t.co/gCq9p3CBjt
— IncomeSharks (@IncomeSharks) May 5, 2022
As Cointelegraph reported, however, price targets of $30,000 or lower in the coming months only increased in the past few weeks.
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