Bitcoin spikes above $21K, pushing the total crypto market cap back above $1 trillion
(Kitco News) - Bitcoin (BTC) and the crypto market got a much-welcomed reprieve in early trading on Friday as a drop in the DXY led to green across global financial markets and threatens to snap a three-week losing streak for Wall Street.
Data from TradingView shows that after hovering near support at $19,200 for most of Thursday, the morning trading session on Friday witnessed a 10.7% spike in price that saw BTC hit a high of $21,370 before bears managed to put up some resistance.
BTC/USD 4-hour chart. Source: TradingView
Bitcoin's move higher sent the top crypto to a two-week high, according to Senior Kitco Market Analyst Jim Wyckoff, who noted that "BC bulls have quickly gained momentum as they have at least temporarily negated a price downtrend on the daily bar chart."
Moving forward, Wyckoff said that bulls need "to show important follow-through buying strength in the next couple days, which would suggest a near-term market bottom being in place."
As a result of the gains across the crypto market, the total market cap managed to climb back above $1 trillion, coming in at $1.036 trillion at the time of writing.
The dollar stumbles
Providing further insight into Friday's surprising move in BTC is David Lifchitz, managing partner and chief investment officer at ExoAlpha. He pointed squarely at the pullback in the DXY as the impetus for today's move.
"US equity futures, European stocks, and pretty much all risk assets rose on Friday morning as the dollar finally stumbled, dropping by the most in a month to the lowest level in September, after hitting an all-time high just two days earlier," Lifchitz said in a conversion with Kitco Crypto.
Prior to the move higher, Lifchitz warned that global actions by Central Banks to "increase their interest rates in order to fight inflation were producing a lot of headwinds for risk assets in 2022, including Bitcoin." This is especially true of the US Fed, "which is so far ahead of its peers in terms of tightening, that it has strengthened the USD, and therefore, weights on the Bitcoin price in USD."
Friday's move lower in the DXY naturally led to gains in Bitcoin, as Lifchitz noted, "with the BTC/USD pair, if USD goes up, BTC mechanically goes down and vice-versa."
What comes next for BTC and the broader crypto market largely depends on how the Fed handles interest rate hikes moving forward, according to Lifchitz.
"After the torrid USD run, it pulls back and BTC jumps... so imagine what it will be when the FED stops hiking or even eases rates... BTC back to the moon (or almost)."
As for now, it's a waiting game to see how the Fed acts. It was only two days ago that the central bank "warned of the risk they perceive of loosening monetary policy too early… and they are expected to raise rates by 75bps again at their next meeting on Sept.21st," Lifchitz noted.
In the meantime, crypto traders are enjoying the widespread green after a rough road so far in 2022 and are looking forward to the arrival of spring following a harsh crypto winter.
The overall cryptocurrency market cap now stands at $1.036 trillion, and Bitcoin's dominance rate is 38.8%.