As the chart shows, the next level of interest is the psychological barrier around $50,000. It’s also the next major Fibonacci level. The 1.618 Fibonacci level is often used as a crucial indicator to predict levels in price discovery. Another important level to watch for Bitcoin is the order block around the $43,300-$43,700 area. Continuation to the upside is likely as long as that area holds.
However, a sharp drop is likely to happen if Bitcoin’s price can’t hold this level. Falling through the $43,300-$43,700 area would generate a cascade of stop/loss triggers as the price of Bitcoin drops back in the range it acted in for several weeks. The next level of support can be found between $37,800-$38,500 if $43,300 fails to hold.
The Dollar Strength Index (DXY) shows weakness after a temporary bottom at 90 points. This bottom formation was marked by a bullish divergence, resulting in a small relief rally. This rally ended at the 91.60 points level and made a U-turn. The primary question for the DXY now would be whether the 90 points level can hold. If that is the case, then the bullish divergence is still valid and a renewed test of 92 could occur. Such a rebound would likely lead to a pullback for the crypto market.
However, if the DXY index continues its downtrend, then there won’t be much to stop the cryptocurrency market from making higher highs and BTC hitting $50,000.
The total market capitalization of crypto shows strength as it broke through the previous high. Only a minor retest of $730 billion occurred, which was followed by a nearly vertical move. The Fibonacci extension tool now shows that the new point of interest is now at $1.5 trillion, as the chart shows. The question is whether the market is ready to continue from here to the next potential point of interest at $2.1 trillion. If the market corrects, which may happen if Bitcoin loses the $43,300-$43,700 level, then traders should watch the $1.05 trillion level for a potential bounce.