- Bitcoin could be set for a red February due to a confluence of several factors
- Bitcoin’s weakness after the Elon pump, the potential topping out of equity markets, and a strong dollar could harm it
- Alts could thrive if the conditions are right
February is shaping up to be a bad month for Bitcoin, for a number of factors. Bitcoin’s weakness following the $6,000 Elon-pump, the potential topping out of the equity markets, and a strong dollar are all combining to suggest that hedging your bets might be the way to go for the next month or so, unless alts are allowed to thrive.
Elon Pump and Dump
The Bitcoin pump that saw the price rocket from $32,000 to $38,000 on Friday should have been the catalyst for the next Bitcoin cycle. Instead the price showed real weakness, dropping back to $32,830 within the same day. This illustrates that the buyers aren’t there to sustain another bullish run, meaning that a return to the trend (a drop to the mid-$20,000s) is highly likely).
Equity Markets Topping Out
It’s not just Bitcoin that is showing weakness. An astonishing comeback following the March coronavirus crash has equity markets hit all time highs, but the momentum is stalling. The NASDAQ, the Dow Jones Index and the S&P 500 are all showing signs of being overbought and exhausted, stoking fears that a market-wide correction is coming on all fronts.
U.S. Dollar Index Primed
To add the to mix, the U.S. dollar index is coming towards the end of a downward wedge which typically results in a strong bounce once it hits a key support. That support is just weeks or maybe even days away, and when the dollar bounces Bitcoin suffers.
Bitcoin Should Rebound in March
With all these factors taken into consideration, it would be surprising if Bitcoin didn’t continue the pullback from its monster run to $42,000, especially when we take the monthly candle into account. Whether alts will continue to thrive depends on the severity of the drop, but a slow steady grind could leave many alts in a great position in their BTC pairings before Bitcoin resumes its uptrend in March.