In our last market update we discussed the markets overblown fears that the slowing economy is signaling an imminent recession, along with also looking at the persistent trend in global liquidity. We also expressed our view that economic growth would generally tend to surprise to the upside in Q4, of which the weekly unemployment claims, and flash manufacturing/services PMIs have been mildly confirming evidence.
Short-Term Holder Realized Price
In the last few weeks, Bitcoin has been able to break back above Short-term Holder Realized Price and use it as a support area before moving higher.
Technical Analysis
Looking at the chart below you can see a couple of key trends. The first is the green lines which point out the bullish divergence in the Relative Strength Index (RSI). An RSI bullish divergence is when Bitcoin makes a lower low but the RSI makes a higher low. This can often be an indication of a trend shift back into a bullish structure, and that’s exactly what we’ve seen over the last couple of months.
As confirmation of the trend shift, you will also notice that Bitcoin has successfully put in 3 higher highs and higher lows, as well as finally breaking its last lower high of $68,000 from July.
Bitcoins Relationship With The US Dollar
In our previous update, we dove into long-term trends in global liquidity as well as how they drive the Bitcoin market cycles. Today we want to look at Bitcoin’s relationship with the strength of the Dollar, as we believe the dollar may have been a culprit for actually slowing down Bitcoin over the last few weeks.
Getting into the chart above we have provided red and green highlights that roughly point out the bullish and bearish trends in the US Dollar Strength Index (DXY). Red=Bullish Dollar, Green=Bearish Dollar.
Due to positive surprises in growth, the dollar has recently been in a rally. But we think this rally could be coming to an end, for now. Our reasoning for this is that the market has significantly repriced interest rates in the last few weeks and DXY is also back up against a significant resistance zone at 104.
If we’re right about this shift in the short-term trend for DXY, then we could see Bitcoin continue to pick up steam over the coming days and weeks.
Quantitative Systems and Current Positioning
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