- Cryptocurrency markets experienced a pullback yesterday, echoing action in the precious metals market
- The move looks to be a standard bull run correction, with key levels still observed
- The U.S. dollar index looks on the verge of a resurgence, which could delay the bull run
The cryptocurrency and precious metals markets both endured a torrid day, with losses made across the board. Bitcoin was one of the least bad hit, suffering a 5% loss, while alt coins and precious metals took bigger hits amid signs that the dollar may be making a comeback.
Gold, Silver, and Cryptocurrency Markets See Red
Gold and silver offered an insight as to what might be on the horizon for cryptocurrency markets this week as they experienced corrections to their impressive recent rallies, enduring double-digit drops that have seen both assets in the red all week. Bitcoin, and the wider cryptocurrency market, followed suit yesterday having managed to hang on in the wake of the metals crash:
The retracement across the cryptocurrency market, particularly with the alt coins, is to be anticipated after such an epic run, and pullbacks in bull markets are not just common but healthy. Bitcoin’s run to $20,000 in 2017 contained numerous 40-50% corrections, and as long as it remains over $11,000 we can consider this nothing more than a temporary pullback.
U.S. Dollar Index Could Scupper Plans
While a resurgence of the cryptocurrency markets is to be anticipated following this drop, Bitcoin, and by extension the rest of the market, may be hampered by one of the reasons why gold and silver dropped – the rise in the U.S. Dollar Index (DXY). Following three and a half months of downwards momentum, the DXY appears to have bottomed out and is just crossed a key level that could indicate a reversal:
As we have previously discussed, a resurgent dollar would spell bad news for Bitcoin, gold, and silver, at least in the short term, as institutions and hedge funds who fled to these alternatives move back into the dollar as it gains strength.
Following the retracement in the cryptocurrency and metals markets and a potentially resurgent dollar, a fascinating tussle is in store in the coming weeks as Bitcoin’s bull market credentials are tested once again.