Bitcoin was very close to hitting the $12,000-resistance level during the early London session on Tuesday. But the cryptocurrency fell prey to profit-taking behavior by daytraders.
BTC/USD surged 2.60 percent to hit $11,957, its highest level in almost two weeks. The upside sentiment followed a minor correction in the ETH/BTC pair that earlier shot upward by more than 17 percent on Ethereum’s addition to the popular DeFi platform, Yearn Finance.
So it appeared, traders’ focus shifted from Bitcoin to Ethereum and DeFi tokens that offered better short-term returns. BTC/USD, nevertheless, stayed on an upside course, particularly after the Federal Reserve announced that it would push its inflation target above 2 percent in the coming years.
The pair, nevertheless, failed to break above $12,000 as traders remained glued to alternative tokens throughout the Asian and early European trading session. Its traditional rival gold, on the other hand, managed to jump above $2,000, an equivalent of Bitcoin’s $12,000-resistance for precious metal traders.
ETH/BTC also pared its minor losses following Bitcoin’s rejection of $12,000, leaving the cryptocurrency at risk of settling new intraday lows.
A Weaker Dollar against Bitcoin
Bitcoin’s correction has landed its price above $11,850 ahead of the New York opening bell. The cryptocurrency is likely to hold that level as traders digest the prospect of a weaker US dollar on Tuesday.
The US dollar index, which pits the greenback against a set of foreign currencies, today fell to its two-year low. That served as one of the primary reasons behind the gold’s intraday rally above $2,000 an ounce. Meanwhile, Bitcoin also attracted a portion of its capital from rival cryptocurrencies on the dollar’s weakness.
Observers now anticipate extra losses for the green paper. Its drop below April 2018 levels have paved the way for a further downside moves, with next bearish targets lurking in the 91.80/75 band.
That may help Bitcoin retest $12,000 and levels above it in the coming sessions. Traders who treat the cryptocurrency as a hedge against fiat money may drive the move upward.
“Keep an eye on the (DXY),” said pseudonymous trader Big Chronis Trading. “The US Dollar correlation to Bitcoin and Gold has been apparent…A Lower Dollar has been bullish for both assets… Any reversal from this pattern is assumed to have a have meaningful bearish impact on crypto.”
Meanwhile, an overbought ETHBTC may undergo a downside correction in the sessions ahead. That further serves as a bullish case for a more substantial Bitcoin.