Crypto analyst Justin Bennett says one factor will likely have to change before he flips bullish on the digital asset markets again.
The closely followed analyst tells his 94,000 followers on Twitter that he’s keeping a close eye on the US dollar index (DXY).
The DXY compares the USD to a basket of other fiat currencies. A weaker DXY can often suggest frailty in many assets, and Bennett says it has a significant effect on the crypto markets.
“The DXY is one of the top reasons I’m not ready to pile back into cryptos yet.
It’s no coincidence that Bitcoin topped out at $69,000 on the day the USD started its rally on November 10th.
Now the US dollar is pressuring resistance ahead of Wednesday’s FOMC…”
Bennett says that in order for crypto markets to have decent shot at starting a new bull run, the DXY would ideally fall below the 95.80 level. Currently, DXY is trading at 96.40.
With DXY showing strength, Bennett says that he’s anticipating consolidation with some downward pressure on crypto for the rest of the month. According to him, Bitcoin could drag down Ethereum to less-than-ideal levels.
“I still think we go sideways to lower throughout December, especially if the DXY breaks higher.
Sweeping the lows at $40,000 sounds reasonable but could cause structural damage to ETH.
Bottom line: Plan for more pain just in case.”
The analyst says that Bitcoin is sitting on a critical level of support near $47,000. If $47,000 breaks, then Bennett predicts another drop down to $43,000.
“BTC is still holding above the April trend line.
Break that, and I’ll look to $43k as the next support.
Bitcoin needs to get back above $53k to turn constructive again.
Lots of chop following the Dec. 4th candle as expected.
8-hour chart:”
Bitcoin is currently trading at $47,120.
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