- Bitcoin price has remained in a consolidation phase in the past few days.
- The consolidation happens as the US dollar index has retreated.
The BTC price has been tight range in the past few weeks as the fear and greed index has retreated. It was trading at $16,600, where it has been in the past few days. This price is slightly above this week’s low of $15,426. The BTC/GBP and BTC/EUR have also consolidated.
Bitcoin and US dollar index (DXY) convergence
The BTC price has come under pressure in the past few weeks as investors focus on the collapse of FTX. As a result, a somber mood has engulfed the crypto industry while Bitcoin’s fear and greed index has remained below 20.
A closer look shows that the divergence that exists between Bitcoin and the US dollar index (DXY) has faded recently. The US dollar index, which measures the performance of the US dollar against a basket of currencies, has dropped from the year-to-date high of $115 to about $105.
The DXY index has retreated because of the change of tune by the US dollar as US inflation pulls back. Data published this month showed that US inflation declined from 8.3% in September to 7.7% in October of this year. This decline was bigger than what analysts were expecting.
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Since then, most Fed officials have sounded positive about the need to slow the pace of rate hikes. They include officials like Mary Daly, Raphael Bostic, and Lael Brainard. This view was confirmed by the FOMC minutes published on Wednesday.
The minutes showed that the Federal Reserve will likely start slowing the pace of increase. Analysts expect that the Fed will now hike rates by 0.50% in December after hiking by 0.75% in the past four meetings. They also expect that the bank will slow the pace of hikes to 0.25% in 2022. A dovish Fed tends to be positive for Bitcoin and other cryptocurrencies.
BTC price prediction
The 4H chart shows that the BTC price has been in a tight range in the past few weeks. It has remained below the important resistance level at 17,000. Also, the chart shows that Bitcoin price has struggled to move below the important support at $15,477, which was the lowest level this month.
Bitcoin has also failed to move above the descending trendline shown in blue. It has moved slightly above the 25-day and 50-day moving averages. Therefore, the coin will likely have a bullish breakout as buyers target the key resistance level at $18,000. Still, any bullish move should be considered a good shorting opportunity.
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