• Bitcoin (BTC) price dropped below $26,000 on May 25 for the first time in two weeks.
• A stronger U.S. dollar appears to have reduced investors’ appetite for Bitcoin and short-term Treasury note yields have soared across the board, further reducing demand for non-yielding assets like Bitcoin.
• From a technical standpoint, Bitcoin maintains its long-term bullish bias by holding above its 200-week exponential moving average (200-week EMA) near $25,200.
Bitcoin Price Drops Below $26K
Bitcoin (BTC) price dropped below $26,000 on May 25 for the first time in two weeks as investors’ focus shifted toward the U.S. dollar which surged to a two-month high. BTC price fell 1.91% to $25,880 only to recover some losses afterward with it trading about 15% below its 2023-high of $31,000 in April.
Factors Driving BTC Price Lower
The U.S dollar index rose to over 104 providing a stronger ‘safe haven’ reputation against market uncertainty led by debt ceiling negotiations and banking crisis while short term treasury notes offered 5.26% returns until maturity further reducing demand for non yielding assets like Bitcoin leading to more than $100 million worth of capital outflows in May according to CoinShares’ weekly report.
Long Term Outlook
Technical analysis shows that BTC maintains its long term bullish bias by holding above its 200 week EMA near $25,200 with a rebound from this wave support potentially aiming at a target range between 30k and 31k while a high volume move above this area could trigger a cup and handle breakout setup with profit goals set above 65k by late 2023 or early 2024 if successful .
Impact Of Stronger Dollar On BTC
The strength of the US dollar affects investor’s appetite towards Bitcoin as they seek safe havens such as treasury notes which offer higher interest rates compared to non yielding assets such as Bitcoin thus resulting in capital outflows from crypto based institutional funds when there is an increase in the US dollar index due to market uncertainty caused by debt ceiling negotiations and banking crisis among other things .
Conclusion
From a technical perspective , BTC has been able to maintain its long term bullish trend despite dropping below 26k on May 25th due to strong U S Dollars which resulted in capital outflows from crypto based institutional funds . If it is able to rebound from the 200 week EMA near 25 , 200 then it can reach its target goal of between 30k – 31k while a high volume move can result in achieving profit goals set above 65 k later this year or early next year .