Bitcoin extended its gains during the last few days, following a series of positive news…
Bitcoin fails to cross the $60,000 psychological resistance level
Bitcoin was unable to surpass the $ 60,000 level and corrected down after rising over the past few days and is currently trading in a range of over $ 57,000.
In the past few sessions, bitcoin price has seen a steady increase above the $ 58,000 resistance level and traded above $ 59,000 but failed to continue rising to reverse its trend and retreat quickly above $ 57,000.
It is worth noting that the cryptocurrency has been fluctuating in the $ 59,000-$ 55,800 range since March 15th, with the only exception being the four-day period between March 23-27.
The total market value of cryptocurrencies has lost $ 27 billion of their value for the period since Monday and now stands at $ 1.913 billion.
Bitcoin is up more than 100% in the first quarter
The main cryptocurrency closed the first quarter, up more than 100 percent, as more and more institutions and companies embraced the idea of safe-haven properties for the currency, for example, The electric car giant Tesla revealed that it has invested about $ 1.5 billion of its cash reserves in bitcoin. It considers the cryptocurrency a store of value.
This was a clear example of how a large company chooses bitcoin and prefers it to the dollar, especially under the impression that this dollar will lose its value against other fiat currencies after the previous year closed down 6.80%, this analogy was followed by a wave of selling expectations for the dollar, making Bitcoin an emerging safe alternative and an attractive asset for investors.
But the strong consensus on the dollar’s weakness began to fade in 2021, as the US dollar index rose by 3.6% in the first quarter. The index rose primarily due to the weak performance of foreign currencies, along with the sharp rise in inflation expectations in the United States, which played a starring role. It includes President Joe Biden’s $ 1.9 trillion stimulus package.
This resulted in sharp selling in the bond market, which in turn led to higher returns, which increased the attractiveness of government debt among foreign investors, especially in Japan, where the yen fell by 7.5% against the dollar in the first quarter.
The long-term bearish outlook for the dollar remains unchanged, and all the current bullish factors that have pushed yields higher that include a faster vaccine launch, a rebound in global trade, and higher commodity prices will remain bearish for the dollar.
What about cryptocurrencies?
On the one hand, Bitcoin rose from $ 20,000 in December 2020 to just over $ 61,000 in March 2021, indicating that it remains an attractive asset for those anticipating hyperinflation.
One of the main reasons Bitcoin has withstood the strong dollar is foreign demand itself. Recently, stock exchanges in South Korea reported higher trading volumes than the global crypto platform Binance, and other parts of the world including Turkey and Nigeria have seen a spike in demand. On the leading currency and other cryptocurrency assets against weaker local currencies.
Professional Trader and Analyst, economist in Financial and Forex market since 2004.holds an MBA from the American University in Egypt. Mohammed works as an economic writer and technical & fundamental analyst for many international Forex and financial trading companies in both English and Arabic on a daily basis.