Why The Bitcoin Price Could Be Building An Uptrend

Bitcoin is trading well above the critical support levels. It could extend its bullish trend over time. Despite the U.S. Federal Reserve promising that interest rates would rise, the cryptocurrency has responded positively to current macroeconomic conditions. 

At the time of writing, the Bitcoin price trades at $20,700 with a 3% loss over today’s trading session and sideways movement over the previous week. Digital assets have performed well in this period, compared to traditional assets like equities. 

Bitcoin price BTC BTCUSDT
BTC’s price moving sideways on the daily chart. Source: Tradeview for BTCUSDT

There are a few reasons why the Bitcoin price will remain bullish

Cumberland is an investment firm believesBitcoin prices are laying the groundwork for a stronger uptrend. The firm claims this bullish price action will be supported by macroeconomic factors and a “growing drumbeat of progress in digital asset adoption.”

Cumberland is of the opinion that the U.S. dollars, as measured with the DXY Index (which measures the dollar’s strength on each factor), shows weakness. In the last few months, the currency has been rising. The bullish price action has negatively affected the Bitcoin price as well as the value of all other assets including gold and equities. 

Bitcoin will have some breathing room if the DXY Index crashes. This would allow it to continue its run through Q4 2022. In the two-year period, cryptocurrency reached a record high of November and Dezember. This is the best period in digital asset history. 

Cumberland added the following on the DXY’s price action, and the reason for its weakness: 

The Fed’s expectations of a mid-2023 reversal are likely to be the reason this rally appears to have reached its peak. In other words, the 5.5% market-implied terminal rate is a lot scarier when short term rates are locked 0% than when they’re hovering around 4%.

Except for unexpected macro-events such as an inflation print higher than expected, the status quo will continue to be maintained. Other sources of uncertainty, the Russian-Ukraine war issues with supply chains, reached a “state of choppy equilibrium.”

U.S. Politics Can Favor Crypto

The short-term uncertainty surrounding U.S. politics is increasing. Tomorrow the United States will elect a new Congress. These elections will have major implications on the crypto market as well as the global economy. The Bitcoin price trend is likely to be higher in this sense. 

The Bitcoin price and other digital assets could be supported by a Republican-controlled Congress. Democrats, on the other hand, are seen as less likely to support or be supportive of the emerging industry. Cumberland wrote this about the possibility of a Republican victory:

If the Republicans are able to regain control over the legislative branch, it is unlikely they will usher in fiscal austerity. We should instead expect lower taxes, greater stimulus and simpler regulation. Similarly, we should expect a less adversarial environment in Washington for crypto (…).

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