Cryptos extend gains on a weaker dollar and ahead of Ethereum Merge
Head of Investment Research
BTC/USD pair, 2-Hour chart
Bitcoin is building on its weekend gains to the start of the new week heading to the next resistance level of $23,000 as the safe-haven U.S. dollar is falling across the board and the improved risk sentiment across the board.
The world’s largest digital coin by market value had been consolidating around the $20,000 support level in the last few weeks, with traders looking for the next bullish catalyst to lift the coin above the $22,000 resistance level.
And the bullish catalyst was the retreatment of the DXY-U.S. dollar index from its 20-year highs of 111 mark; hit on September 07, to the current lows of 108 mark, following the hawkish monetary stance by the Federal Reserve to curb surging inflation.
Ethereum, the second-biggest digital coin by market value is rising to the $1,800-$1,900 resistance range ahead of the well-awaited Ethereum Merge, which is scheduled to take place on Wednesday, September 14.
The “Merge” is a software update that will radically change how transactions are processed and are supposed to slash energy consumption.
It will likely increase enterprise interest in Ethereum due to the advancement of the network, and it’s the main reason why Ether was posting higher lows and higher highs during the summer.
Dollar vs Cryptos: Negative correlation:
All major bottoms in cryptocurrencies have coincided with local tops in the greenback, indicating a negative correlation between the price of both assets.
For instance, the “top and bottom indicator” was clearly seen last week, when Bitcoin and Ethereum briefly sank below the $19,000 and $1,500 marks respectively on September 07, the day greenback peaked against major currencies after hawkish comments from the Federal Reserve, before both coins bouncing to the current 1-month highs supported by some profit-taking in the dollar.
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