Strong Dollar Spells Trouble For Bitcoin (BTC) And Other Cryptocurrencies

The US Dollar (USD) has been in a steady uptrend against the Euro (EUR) since the beginning of the year. The daily chart for EUR/USD shows that the Euro has printed lower highs and lower lows for the most part as it declined against the Dollar. EUR/USD continues to be in a downtrend and President Trump seems to have no interest in resolving the US-China trade war situation. In fact, it has been worsened with recent developments and it is becoming clear that the United States wants a strong Dollar. EUR/USD is currently trading in a large descending triangle that extends back to November, 2018. This is the same month BTC/USD broke market structure and declined to its yearly low at $3,130. Interestingly enough, EUR/USD is expected to make a similar move that will drag BTC/USD down with it if it happens.

The daily chart for EUR/USD also shows that the price broke below the 61.8% fib extension level and has been struggling to get back above it. So far, it has failed and it continues to be at a strong risk of breaking below this descending triangle. At this point in time, given the situation with China and Iran, there is no lack of catalyst that could push EUR/USD off a cliff. The price is expected to test the long term trend line support (shown in white) anyway and we expect that will happen during the next downtrend. If and when this happens, EUR/USD could decline for months and so will Bitcoin (BTC) and other cryptocurrencies. All of these external and internal factors are screaming that BTC/USD has not bottomed yet but the recent price pumps has induced a wave of FOMO that is unlikely to die down until the market crashes again.

The cryptocurrency market is like a casino in so many ways. One might argue that the ‘owners’ of this casino have far more privileges than a casino would as there are no rules and you could print money out of thin air. This is exactly what Tether (USDT) has done and continues to do so. The total market cap of Tether (USDT) is around $3 billion but its 24 hours trading volume is around $27 billion. This is all traceable and the SEC or other regulatory bodies are not going to sit back and watch this happen for long. Certainly, by the time they come cracking down the big players would have already cashed out and when the market crashes, the retail traders and investors will feel the pain.

Everything on the weekly chart for BTC/USD is screaming sell, sell, sell yet the vast majority of people hate it when anyone tries to wake them from their delusional moon dreams. The worst investor is a desperate investor, someone who doesn’t know about other opportunities. So, if they see BTC/USD making big gains that is where they put their money in regardless of how bad of a decision it might be to invest at that time. Retail bears have been greedy and they learnt their lesson the hard way as they tried getting in front of a parabolic rally, but retail bulls seem to be even greedier. While most retail bulls were lucky enough to have made big gains when they did not expect it, they do not want to cash out yet because they want to see BTC/USD rallying to $10,000 or $13,000. I don’t know about you, but I have seen this movie many times and it does not end well.