Business

Bitcoin bounces off 6-week lows amid warning of a ‘brutal’ bull trap in BTC price

Bitcoin (BTC) regained $39,000 on April 27 after BTC/USD hit its lowest level since mid-March in another night of pain.

blank
BTC/USD 1 Hour Candlestick Chart (Bitstamp). Source: TradingView

“All assets suffer” from the unbridled dollar

Data from Cointelegraph Markets Pro and TradingView showed the largest cryptocurrency trade at $39,200 on Bitstamp at the time of writing, up 2.5%.

Fresh troubles emerged on Tuesday as soon as Wall Street started trading, Bitcoin once again followed shares lower, hitting $37,700 twice.

While this area was already on the radar as a liquidity-raising opportunity, some were far from convinced that the sell-off was over.

The current relief, popular trader Kaleo argued, was simply a form of dead cat impact, and the real pain would begin when the momentum died down.

“Well, this price action in bitcoin doesn’t scream too much for upside at this point. Difficult as it bounces back on every boost,” said Cointelegraph contributor Michaël van de Poppe added.

As has been the case throughout the week, the US Dollar showed no signs of ending its bull run, adding to the pressure on crypto as the US Dollar Currency Index (DXY) challenged multi-decade highs set in March 2020.

“The DXY is reading higher than my baseline due to decisions by policymakers outside of my baseline,” says economist Lyn Alden wrote in a Twitter thread about the phenomenon.

“So we have to be aware of the market problems that will arise when this happens. It’s not a milkshake (e.g. US hikes rates and gets equity holdings), all assets suffer.”

blank
US Dollar Currency Index (DXY) 1 week candlestick chart. Source: TradingView

TradFi and crypto are feeling the fear

The nervousness among both crypto and traditional traders was thus clearly seen, which was reflected in declining market sentiment.

Related: Bitcoin Repeats Rare Weekly Chart Signal That Led to 50% BTC Price Drops

The Crypto Fear & Greed Index hit its lowest level since April 12, which at 21/100 represented “extreme fear” as the leading sentiment in the market.

blank
Crypto Fear & Greed Index (Screenshot). Source: Alternative.me

Its traditional market counterpart, the Fear & Greed Index, which until recently lagged crypto in “neutral” territory, also adjusted, posting 27/100 or “fear” on Wednesday.

blank
Fear & Greed Index (screenshot). Source: CNN

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.