Today, negative news for the price of Bitcoin

Today, there are no positive news for the price of Bitcoin. 

In fact, yesterday it dropped, showing signs of weakness. 

Although the situation is still within normal parameters, yesterday’s decline is somewhat anomalous, as it occurred with a declining Dollar Index. 

The Price of Bitcoin Today

Today the price of Bitcoin is fluctuating between $101,000 and $102,000, at least for now. 

Last night, however, it had also dropped to $100,000 before bouncing back.

To be honest, it has been in a minor downtrend since Wednesday evening.

After briefly reaching $104,500, the day before yesterday a decline began in two phases, followed by a slight rebound. 

The initial drop had brought it back below $103,000 yesterday, but after the reopening of the US markets, a second decline began, concluding only last night at around $100,000. 

However, it should not be forgotten that on Tuesday evening it had also fallen below $99,000, but then experienced a significant rebound precisely up to $104,500.

The Causes

The primary cause of yesterday’s decline appears to be linked to the significant drop in the US stock market. 

In fact, it was a decline concentrated during the opening hours of the US stock exchanges, when there was a slight shift away from risk-on.

To be honest, the issue actually originates from relatively far back, as it began on Friday, October 24, when a mini-bubble started to inflate in the American stock market.

This mini-bubble inflated until Wednesday, October 29, and starting from Thursday, October 30, it began to burst. 

However, the burst was not instantaneous, but initially only partial, and was followed the day before yesterday by a slight rebound that seemed to foreshadow the exhaustion of the mini-bubble. 

However, yesterday there was the final drop, with, for example, the S&P500 index returning exactly to the values prior to the mini-bubble.

It should be noted that mini-bubbles typically operate in this manner: they inflate relatively quickly and deflate shortly after, ultimately leaving everything exactly as it was before they began to inflate. Generally, they don’t even have significant consequences, but are merely brief temporary anomalies inevitably destined to dissipate. 

Bitcoin’s Reaction

The problem is that when this mini-bubble in the American stock market began to inflate, it ended up draining capital from the crypto markets. 

Indeed, by the end of October, the price of Bitcoin had risen slightly due to a minor resurgence in risk-on sentiment, but it had increased very little, hindered by the capital outflow from the US stock market. 

In fact, while the mini-bubble in the stock market began to burst on Thursday, October 30, the decline in Bitcoin’s price had already started two days earlier, likely due to the aforementioned capital drain. 

During the initial phase of the mini-bubble burst, the price of BTC fell from $116,000 to $106,000 over the course of three days, but the decline resumed on Monday, November 3, coinciding with the continued burst of the stock market mini-bubble. 

Wednesday the 5th, while the US stock markets gave a false signal of the end of the burst, the price of BTC managed to record a small rebound, but yesterday there was the final phase of the burst with a return to $100,000. 

Bitcoin (BTC) Price Predictions

Today, the S&P500 futures indicate that, indeed, for now, the burst of the mini-bubble might be over. After all, on the US stock exchanges, everything has now returned to the same level they were at before it started to inflate. 

For now, however, the price of Bitcoin continues to show signs of weakness, as it is not managing to rebound like it did on Wednesday. 

It is possible that this is related to the forecasts concerning the Dollar Index. 

The price trend of BTC tends to be inversely correlated with that of DXY in the medium term, but in the short term, this correlation can temporarily break. 

Yesterday, for instance, the Dollar Index fell below 100 points after rising above it between Tuesday and Wednesday, but the price of Bitcoin did not respond with an upward movement. 

The point is that the Dollar Index is expected to return above 100 points in the coming days and remain there until about the middle of next week. 

In such a scenario, it is possible that the crypto market is already pricing in this eventuality on BTC’s price.

The Decline of DXY

It is worth noting, however, that after the middle of the month, a significant decline in the Dollar Index is theoretically expected. 

In fact, not only could it significantly drop below 100 points, but by January it might even manage to break downward through the 18-year-long upward trend, which currently has its baseline positioned just above 96 points. 

Should this occur, it seems unlikely that the price of Bitcoin would not react with strong increases, especially since the potential movement just described on DXY would not happen in the short term, but rather in the medium term, according to the timing of the crypto markets. 

This therefore implies that starting from the second half of the month, a new Bitcoin bull run could theoretically begin, although none of this is actually guaranteed.