Bitcoin (BTC) price dropped to an intra-day low at $66,569 on July 22, less than 24 hours before the much-awaited launch of spot Ethereum ETFs in the United States.
The bullish momentum that propelled BTC above $68,000 falls under question as traders struggle to secure a few daily closes above $68,000.
Apart from the impact of US President Joe Biden’s withdrawal from the November presidential race on Bitcoin’s price, the pioneer cryptocurrency is facing yet another issue: a strengthening US dollar.
Let’s take a closer look at the factors impacting Bitcoin price today.
The US dollar starts to recover
The US dollar Index (DXY), a metric tracking the greenback’s performance against top world currencies, has risen 0.7% from its July 17 low of 103.18 to its current value of 103.85 ahead of the Personal Consumption Expenditures (PCE) Index from the United States.
The PCE print, known as the Federal Reserve’s “preferred” inflation measure, is due July 26, a day after second-quarter gross domestic product and rolling unemployment figures. This could potentially provide tailwinds to the DXY and heighten volatility for Bitcoin and other cryptocurrencies at the end of the week.
From a technical perspective, the US dollar Index looks on track to rise by more than 1.8% to complete a classic V-shaped recovery pattern toward 2024 highs above 106.
Bitcoin bulls book profits amid political uncertainty
Biden’s withdrawal and endorsement of Vice President Kamala Harris for the presidency introduced some volatility to markets.
While the Republican presidential candidate, Donald Trump, has incorporated a pro-Bitcoin stance into his election platform, Harris’s stance on cryptocurrencies remains unclear.
Market intelligence firm sentiment noted that the market appears to react with an “immediate small panic drop in crypto prices” to news of Joe Biden’s stepping aside, as it did with the news of the Trump assassination.
“Though wildly different circumstances, the news of the Trump attempted assassination from 2 weeks ago caused a similar price pattern. Throughout the closing hours of Sunday, prices quickly bounced after an initial drop and are now quite volatile to start the week.”
According to 10x Research founder Markus Thielen, Bitcoin’s downturn today could suggest that traders are booking profits ahead of Trump’s speech at the Bitcoin Conference on Saturday, July 27.
“Taking profit, or even shorting Bitcoin ahead of Trump’s Nashville speech, could turn out to be an expensive exercise,” wrote Thielen in his newsletter on July 22.
Thielen further noted that Bitcoin is fighting stiff resistance from the 2021 all-time high of $69,000 and that BTC could “rise parabolically” once the price produces a decisive close above that level.
Related: BTC price 8% off all-time high — 5 things to know in Bitcoin this week
Bitcoin long liquidations ramp up
A sharp movement in the Bitcoin futures market appears to have caused BTC’s price decline over the last 12 hours. The timing of the long liquidations coincided with the sharp drop in the price of the pioneer cryptocurrency.
Data from Coinglass shows that more than $7.16 million in BTC long positions have been liquidated over the last 12 hours. The total liquidations across the crypto market amounted to $41 million, with $23.3 million being long liquidations in the same period.
Typically, long liquidations occur when the price of the asset being traded suddenly drops. This is because traders who were bullish on the asset and had opened long positions face losses since the market has moved against them.
According to data from blockchain data provider CryptoQuant, the number of Bitcoin transferred to exchanges spiked on July 22.
Increased exchange inflows for a particular asset suggest increased selling pressure in the market.
With an increasing number of BTC sent to known exchange wallets, investors seem to be taking profits at current prices, explaining the current volatility in Bitcoin price.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
