Bitcoin Eyes Continued Recovery as Dollar Slides

The latest moves in crypto markets, in context

Edited by Omkar Godbole

January 13, 2022

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Good morning, and welcome to First Mover. Here's what's happening this morning:

Market Moves: Bitcoin eyes continued recovery as the U.S. Dollar Index (DXY) slides.

And check out the CoinDesk TV show "First Mover," hosted by Christine Lee, Emily Parker and Lawrence Lewitinn at 9:00 a.m. U.S. Eastern time. Today's show will feature guests:

Market Moves

Bitcoin looked poised for a continued recovery rally early Thursday, with the U.S. Dollar Index falling to a two-month low of 94.72.

"The greenback often softens after the first rate hike, which is increasingly looking like it will happen in March," Marc Chandler, chief market strategist at Bannockburn Global Forex, said in his daily analysis blog. A weakening dollar is considered bullish for bitcoin and asset prices, in general.

The DXY, which tracks the greenback's value against major currencies, has penetrated the 9-month bullish trendline, signaling scope for an extended drop.

That said, bitcoin traders need to keep an eye on reasons for continued DXY weakness, if any. The greenback could lose further ground on potential pricing out of the Federal Reserve's recent hawkish bias, which would be positive for bitcoin.

However, dollar weakness borne out of coordinated global tightening may not help bitcoin that much.

So far, the likes of European Central Bank, Swiss National Bank, and Bank of Japan have been in a wait-and-watch mode. With inflation already elevated across the globe, these central banks may turn hawkish if the Fed tightening weighs over their respective currencies. Currency depreciation is inflationary.

CME bitcoin futures premium remains low

Bitcoin's entity-adjusted dormancy flow (Glassnode)

While bitcoin has bounced in the wake of the U.S. inflation data released Wednesday, there are few signs of renewed institutional commitment to the cryptocurrency, as evident from the still-depressed futures premium on the Chicago Mercantile Exchange (CME).

The annualized rolling three-month basis or premium on the CME remains below 4%, according to data tracked by the crypto derivatives research firm Skew. The CME is considered a proxy for institutional activity.

Meme tokens rally

Meme coins were among the biggest 24-hour gainers at press time, with shiba inu (SHIB) trading 7% higher. The price bump in the dog-themed cryptocurrency came after rumors of a listing on the trading platform Robinhood did the rounds on Twitter.

“Shiba Inu Robinhood listing said to come as early as Feb,” a tweet by business news handle ZeroHedge read. Robinhood did not return requests for comment.

Read more: Shiba Inu Surges 16% After Rumors of Robinhood Listing

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Latest Headlines

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Technician's Take

By Omkar Godbole

Double bottom on Monero

ADA's 4-hour chart with relative strength index (Source: TradingView)

The privacy-focused monero (XMR) token has again bounced from a long-held support around $175, hinting at a potential "double bottom" formation – when the price twice dips to the same or similar level, creating a pattern on the chart that resembles the letter "W."

A move above the Jan. 1 high of $254 is needed to confirm a double bottom breakout, a bullish reversal pattern.

ICYMI

In case you missed it, here are the most recent episodes of "First Mover" on CoinDesk TV:

US Economy Sees Highest Inflation in 4 Decades, Is Bitcoin Still an Inflation Hedge?
"First Mover" hosts speak to PwC Global Crypto Leader Henri Arslanian for his analysis on the crypto markets as the U.S. December consumer price indexes increased 7% from a year ago, the highest level in four decades, and he shares his top crypto prediction for 2022. Plus, former SEC Branch Chief Lisa Bragança shares insights into the current state and outlook for SEC crypto regulation.

Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.

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