🚨Why Bitcoin Isn’t Pumping – What’s Holding It Back?

Bitcoin continues to struggle to breakout above $70,000. I explain the reason behind this.

Oct 26, 2024

Hey Thinkers 💡

Bitcoin: Waiting for the Breakout

We're all waiting for Bitcoin to make its next move, breaking through the resistance and sparking the next phase of this crypto bull market. However, Bitcoin has been stuck in a sideways pattern—every small breakout hitting a ceiling before falling back down. So, what's holding BTC back?

The Dollar Index (DXY) Effect

The primary factor appears to be the Dollar Currency Index (DXY), which has been going parabolic. While short-term strength in the dollar was expected, the extent of this rally has caught many by surprise. As the DXY rises, it typically puts pressure on risk assets like Bitcoin and altcoins, making it challenging for them to gain momentum.

But here’s the silver lining: the DXY’s daily RSI (Relative Strength Index) is now overbought, exceeding 70 by textbook standards. This suggests a breakdown could be on the horizon. Once the DXY dips below 100, we could see the crypto market go parabolic, given the historical inverse relationship between Bitcoin and the DXY in both bull and bear cycles.

Factors Aligning for Bitcoin’s Next Phase

While many investors are growing impatient, multiple factors suggest we are on the cusp of the next bull phase:

Election Uncertainty
The upcoming U.S. election, now less than two weeks away, has created a level of uncertainty. Historically, markets tend to stabilize and gain momentum post-election, which could catalyze upward movement in Bitcoin and other risk assets.
Global Liquidity Increase
Global liquidity is slowly on the rise, despite a temporary pullback from DXY strength. Governments continue to increase money supply, with China injecting significant stimulus. As interest rate cuts resume, more liquidity will enter the system, benefiting assets like Bitcoin.
Stock Market Leading Indicator
Traditionally, the stock market leads crypto trends. Recently, indices like the S&P 500 and Nasdaq have reached new highs, even though they’re experiencing short-term pullbacks due to DXY pressures. This strong performance hints at positive momentum for crypto once DXY begins to weaken. A good sign on the micro time frame for Bitcoin is its forming higher highs and higher lows.
Onchain Metrics Point to Accumulation
Bitcoin’s supply on exchanges keeps decreasing, reducing sell pressure, and wallets holding 10+ BTC continue to increase, indicating whales are still accumulating. This accumulation trend is a positive sign for Bitcoin’s potential price trajectory.
Seasonality Favoring Crypto
Historical data suggests that seasonality is on crypto’s side, with the potential for 2025 to continue the trend of positive returns seen in 2023 and 2024.

In Summary

The stars are aligning for Bitcoin’s next move, but patience is key. While we wait for the DXY to show signs of reversal, it’s essential to keep the bigger picture in mind. We’re nearing a confluence of market dynamics, and once the conditions are right, Bitcoin and the broader crypto market could see significant upward movement.

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