The Bitcoin (BTC) price fell to an intraday low of $66,569 on July 22, less than 24 hours before the launch of a spot Ethereum ETF in the United States.
The bullish momentum that pushed BTC above $68,000 is being questioned as investors struggle to secure a daily close above $68,000.
In addition to the impact of the withdrawal of US President Joe Biden from the November election on the price of Bitcoin, the pioneering cryptocurrency is also facing another problem: the strength of the US dollar.
Let’s take a closer look at the factors affecting Bitcoin’s price today.
The US dollar begins to recover
The U.S. Dollar Index (DXY), a gauge that tracks the greenback’s value against a basket of major world currencies, rose 0.7% from a low of 103.18 on July 17 to its current value of 103.85, outpacing the U.S. Personal Consumption Expenditures (PCE) Index.
The PCE, known as the Federal Reserve’s “preferred” inflation measure, is scheduled to be released on July 26, a day after the release of Q2 GDP and the cumulative unemployment rate. This could potentially provide a boost to the DXY and increase volatility for Bitcoin and other cryptocurrencies over the weekend.
From a technical perspective, the US Dollar Index is expected to rise by more than 1.8% to complete a classic V-shaped recovery pattern heading towards a high of 106 or higher in 2024.
Bitcoin bulls gain profits amid political uncertainty
Biden’s resignation and Vice President Kamala Harris’s endorsement of the presidential election have caused some volatility in the markets.
While Republican presidential candidate Donald Trump has included support for Bitcoin in his campaign platform, Harris’ stance on cryptocurrencies remains unclear.
Market intelligence agency Sentiment noted that the market appeared to react to the news of Joe Biden’s resignation with “an immediate and minor panic in cryptocurrency prices,” similar to the news of Trump’s assassination.
“While very different circumstances, the news of the assassination attempt on Trump two weeks ago triggered a similar price pattern. Prices bounced back quickly after an initial drop through the closing bell on Sunday, and are now very volatile at the start of the week.”
According to 10x Research founder Markus Thielen, today’s Bitcoin decline could indicate investors are locking in profits ahead of President Trump’s scheduled speech at a Bitcoin conference on Saturday, July 27.
“Buying or shorting bitcoin ahead of Trump’s Nashville speech could be an expensive proposition,” Thielen wrote in a July 22 newsletter.
Thielen added that Bitcoin is facing strong resistance at its 2021 all-time high of $69,000, and that a decisive close above that level could lead to a “parabolic rally” for BTC.
Related: BTC Price Down 8% From All-Time High — 5 Things to Know About Bitcoin This Week
Bitcoin long liquidations surge
The sharp movement in the Bitcoin futures market appears to have caused the BTC price to drop over the past 12 hours. The timing of the long-term liquidation coincided with the sharp decline in the price of the leading cryptocurrency.
According to Coinglass data, over $7.16 million worth of BTC long positions have been liquidated in the last 12 hours. Total liquidations across the crypto market have reached $41 million, while long liquidations during the same period amounted to $23.3 million.
Long liquidation usually occurs when the price of the asset being traded suddenly drops. This is because traders who are bullish on the asset and have opened long positions suffer losses as the market moves against them.
According to data from blockchain data provider CryptoQuant, the number of bitcoins transferred to exchanges surged on July 22.
An increase in currency inflows into a particular asset means that there is increasing selling pressure in the market.
As the amount of BTC being transferred to known exchange wallets increases, investors appear to be taking profits at the current price, which explains the current volatility in the Bitcoin price.
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.