• Bitcoin tumbles as the rise in the US Dollar Index continues.
  • An escalation of the war in the Middle East could trigger a more risk-off scenario, causing a further uptick in the Greenback.
  • Bitcoin price must drop to key weekly levels before investors consider buying the dips. 

Bitcoin (BTC) price remains rangebound on Tuesday, with no directional bias in sight and moving inside a consolidation range since the beginning of March. With the US Dollar Index continuing to rally, BTC could see a further drop. 

Bitcoin and macroeconomic outlook

Bitcoin’s reaction to macroeconomic events has declined significantly in the past few months. Despite that, there is a strong connection between the US Dollar and BTC — an inverse correlation, to be precise. As mentioned in a previous publication, the US Dollar Index – which gauges the value of the Greenback against a basket of six foreign currencies – rose 1.84% in the last three weeks, causing Bitcoin to crash 16%.

It looks likely that the US Dollar Index’s ascent will continue until it tags 107.17, the midpoint of the 13% crash noted between September 2022 and July 2023. In such a case, BTC could continue its descent until it tags the weekly imbalance, extending from $59,111 to $53,120.

Read more: Key Bitcoin price levels to buy the dips

US Dollar Index 1-week chart

US Dollar Index 1-week chart

Greenback’s reaction to the Middle East war 

The conflict in the Middle East seems to have intensified after Iran’s drone strike over the weekend. As the entire world awaits Isarel’s next step, the geopolitical tension has caused the US Dollar to appreciate due to the increase in safe-haven demand. As mentioned in our FXStreet publication, the Greenback had the strongest rise against the Euro. 

Read more: Middle East tensions escalate over the weekend after Iran attacks Israel

As the US Dollar Index trades at 106.34, three factors need to be considered in determining whether BTC will continue to crash or reverse.

  1. Multi-month resistance levels between 105.00 and 106.00 and if they will be flipped into a support zone.
  2. Geopolitical tensions and their lasting effect on the Greenback.
  3. Higher interest rates.

In addition to these, the fourth halving event scheduled on April 20 will also have a significant influence on Bitcoin price.

Read more on Bitcoin halving, rising dominance and US Dollar’s impact on BTC price - Link

For now, Bitcoin's price needs to dip in the weekly imbalance, extending from $59,111 to $53,120, to see how the pioneer crypto reacts and draw conclusions on what could happen next.

The short-term outlook remains unclear and could potentially trigger a crash, but the long-term outlook remains bullish.

BTC/USDT 1-day chart 

BTC/USDT 1-day chart 

Read more: Bitcoin Weekly Forecast: BTC’s rangebound movement leaves traders confused


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Join Telegram

Recommended content


Recommended Content

Editors’ Picks

Bitcoin active addresses hit lowest level in five years, BTC ranges below $67,000

Bitcoin active addresses hit lowest level in five years, BTC ranges below $67,000

Bitcoin (BTC), the largest asset by market capitalization, has noted a decline in its active address count per data from Glassnode. A decline in active addresses is typical at a time during a surge in Bitcoin transaction fees.

More Bitcoin News

SEC vs. Ripple lawsuit update: Regulator responds to letter regarding Terraform Labs judgment

SEC vs. Ripple lawsuit update: Regulator responds to letter regarding Terraform Labs judgment

Securities and Exchange Commission (SEC) responded to Ripple’s letter that quotes the reasons for the settlement amount being unreasonable. The payment firm had proposed a fine of $10 million, as opposed to the SEC’s $2 billion. 

More Ripple News

Gemini Earn creditors could recover their funds in coin as New York Attorney General recovers $50 million

Gemini Earn creditors could recover their funds in coin as New York Attorney General recovers $50 million

Gemini exchange had terminated its Earn program after Genesis Global Capital did not return over $900 million in assets that it owed to the platform. New York Attorney General Letitia James’ office has recovered a total of $2.05 billion from the platform.

More Cryptocurrencies News

Here’s what you need to know about LayerZero ZRO token airdrop

Here’s what you need to know about LayerZero ZRO token airdrop

LayerZero Labs CEO Bryan Pellegrino released details of the upcoming ZRO token airdrop in a recent tweet. ZRO total supply is 1 billion of which 23.8% will be directly allocated to the community and builders. LayerZero announced June 20 as a key date, it remains unclear whether this is the airdrop or entitlement date. 

More Zro News

Bitcoin: Has BTC found a local price bottom?

Bitcoin: Has BTC found a local price bottom?

Bitcoin (BTC) price looks set for a mild fall this week, weighed by slight outflows in the US spot ETFs and the US Fed keeping a hawkish interest-rate outlook despite easing inflation. Technical indicators suggest that BTC could face a further 5% correction in the short term before resuming the uptrend.

Read full analysis

BTC

ETH

XRP