Key Bitcoin takeaways
- Bitcoin declined on Thursday as an exclusive TheStreet coverage revealed Soros Fund Management is trading the cryptocurrency.
- The plunge also appeared as the US dollar index reached its three-month peak.
- Downside pressure around the $35,000-resistance also contributed to the Bitcoin price declines.
Bitcoin prices dropped sharply on Thursday on rumors that Soros Fund Management has started trading the benchmark cryptocurrency.
First published by TheStreet, the news received mixed feedback from the cryptocurrency community, partly because of Soros’s history of raking profits by shorting assets. For instance, the private investment firm, headed by billionaire George Soros, was instrumental in breaking the Bank of England in 1992 after excessively betting on the pound’s decline.
“This could be a positive or a negative depending on how they trade it,” noted Anthony Pompliano, partner at Pomp Investments.
The BTC/USD exchange rate plunged 5.31% to $33,200 on Thursday. The pair’s downside move also came as a part of a broader bearish correction that started after it peaked seasonally at $36,675 on Tuesday. Traders have utilized rallies above $35,000 lately to secure short-term profits.
Stronger dollar
More headwinds for Bitcoin came in the form of a stronger US dollar.
The US dollar index, which tracks the greenback’s strength against a basket of foreign currencies, advanced 0.14%. That added to its 0.31% gain on Wednesday, insomuch that the index reached its three-month high to 92.44 following the consecutive buyouts.
The dollar found additional support from better-than-expected results from the US economy following the reopening of its economy amid a fast coronavirus vaccination drive. Meanwhile, consumer prices rose to 5% in May, prompting the Federal Reserve to prepone its rate hike plans from 2024 to 2023.
The prospects of a hawkish Fed also raised an appetite for the greenback while sapping demand for rival safe-havens like gold and Bitcoin. In addition, fears of coronavirus’s delta variant also lent legs to the risk-off mood. Moving further, investors now watch Friday’s nonfarm payroll data, which expects to show an improvement in the US labor talk.
The Fed has clarified that it would start tapering its $120bn bond purchasing program once it sees the economy achieving maximum employment.
Back to $30,000?
As for Bitcoin, the cryptocurrency continues to struggle inside its $30,000-40,000 price range. Traders have been unable to establish a concrete bias in either direction, fearing that BTC/USD might have turned overvalued following its strong rally from $3,858 in March 202o to around $65,000 by mid-April.
A recent run-up in the Bitcoin prices has done little in offsetting fears that it might crash back below $30,000. Analyst at Mott Capital Management applied Elliot’s Wave strategy on Bitcoin charts to conclude that the cryptocurrency would crash hard in the coming sessions.
“Based on a projection of this 5 wave counted, Bitcoin is likely heading toward 16,300,” the firm noted. “Additionally, the relative strength index is falling, suggesting the bulls have no control over it at this point. Even the MACD is showing a downward sloping trend line as well. This is also a big negative.”