However, while at a superficial analysis this might seem like a bad sign, more in-depth analyses highlight how it is actually absolutely normal in a market phase like this.
In fact, in theory, it could even be considered a good sign that the value of Bitcoin has not fallen below 107,000 USD.
The Descent
Last Friday, the value of Bitcoin had dropped below 104,000 USD during a flash-crash spike vaguely similar to the previous Friday’s.
However, after a few hours, it was already back above 106,000 USD, and in the evening it also returned above 107,000 USD.
At this specific historical moment, 107,000 USD is the new key threshold, replacing the 110,000 USD from last week.
The fact, however, is that on Sunday it had also climbed back above 109,000 USD, and yesterday it managed to rise above the critical threshold of 110,000 USD.
However, this threshold has already failed today, indicating that it can no longer be considered the key threshold, as it was last week.
The decline started last night, and it happened almost in a single movement lasting about seven hours, briefly bringing it to 107,500 USD. Subsequently, it marked a slight rebound, and now it oscillates above and below 108,000 USD.
The Dollar
The decline last night was likely triggered by a small rise in the Dollar Index.
It should be noted that in the medium term, the price trend of Bitcoin in dollars tends to be inversely correlated with that of the Dollar Index, although sometimes this inverse correlation also manifests in the short term, as happened last night.
Last week, the Dollar Index had dropped from a peak high of 99.5 points to a low of 98, before bouncing back to 98.5.
Its key threshold in this historical period seems to be precisely the 98.5 points, so much so that yesterday it essentially fluctuated a bit above and a bit below this figure.
Today, however, it rose to a local peak above 98.8 points, then fell to 98.7. Yesterday, for example, the higher fluctuations had stopped at 98.6.
The rise of the Dollar Index last night, which should be considered significant even if it is brief and not very pronounced, had an immediate impact on the value of Bitcoin in USD.
Gold
There is also another problem.
For at least two weeks now, the gold market seems to be draining liquidity from that of Bitcoin.
After surpassing the price of $4,000 per ounce for the first time in its history, gold experienced a speculative mini-bubble that drove it above $4,300 in just a few days.
To inflate this mini-bubble, it had to drain capital from all other markets, and the one bearing the brunt is precisely Bitcoin.
It is probably not a coincidence that when it started to inflate, between October 6th and 7th, the value of Bitcoin in USD reached an all-time high before beginning to decline significantly.
To be honest, last Friday gold had lost the temporary support of $4,300, but yesterday it finally recovered it, and today it even pushed to $4,378.
This figure constitutes the new all-time high, but it is perfectly in line with the previous peak of $4,376 reached on Friday before the brief mini-correction.
However, as long as it does not fall back below $4,300 per ounce, it will continue to have a negative impact on the trend of the value of BTC, and if it manages to break through the psychological threshold of $4,400, it could trigger a new drop in Bitcoin.
The Reversal
However, there is also the possibility that the mini-bubble inflated on the gold price above $4,000 per ounce may burst in the short, or medium-short term.
If this indeed happens, two things could occur.
The first is a return of the gold price below $4,000 per ounce, although according to several analysts it might be only a temporary return.
The second is a temporary liquidity outflow from the gold market.
In particular, some of the liquidity exiting gold could flow into Bitcoin, given that the opposite has happened in the last two weeks. This could reignite the BTC bullrun, and perhaps contribute to the development of a new mini-bubble this time on the price of Bitcoin.
