Today, the price of Bitcoin stands under the magnifying lens as it takes a sharp reverse hike from $28,590 to around $27,390, marking a plunge of over 4% within a 24-hour time frame. Financial enthusiasts observe a blend of factors conspiring to fuel this development.
At the foreground, the rise of U.S. bond yields plays a crucial role. As the benchmark U.S. 10-year Treasury note yield ascends to 4.75%, its highest in sixteen years, it inevitably imprints an adverse impact on Bitcoin’s price performance. The theory behind this phenomenon lies in the opportunity cost of holding Treasuries. As yields increase, the value of the U.S. dollar strengthens against the world’s top foreign currencies. Hence, the U.S. dollar index (DXY) reaching its highest level since November 2022 is no surprise.
Consequently, a stronger dollar spells bearish news for Bitcoin’s prospects. Layered on top of this economic scenario is Bitcoin’s technical standing. The cryptocurrency’s pullback appears all but predictable due to its overbought relative strength index (RSI). After reaching the most overbought level in over a month, it sets the stage for a correction or consolidation period, hinting at a shrinking buyer pool at higher price levels.
Offsetting the bearish sentiment, however, is the compelling liquidation landscape. Though the Bitcoin price decline picks up pace due to long liquidations’ might over shorts, the funding rates still remain above zero. Essentially, as long position holders still pay for short positions, it indicates a predominant bullish sentiment in the market.
Stepping back to take a broader view, Bitcoin’s technicals wave cautionary flags of possibly deep-rooted bearish bias. As a classic bearish reversal pattern emerges on the daily chart with a so-called rising wedge, there is potential for a decline until a rebound is seen in the lead up to a new record high.
While skepticism breathes, prospects also linger as optimists foresee a bounce pre or post-test of the wedge’s lower trendline and an eventual record high. The Bitcoin ball, it appears, bounces on two courts. It remains to be seen which side pulls stronger. Meanwhile, the dignity of this Decentralized Technology, which stands as the heart of Bitcoin, remains wholly intact.
Source: Cointelegraph
