Strong U.S. Dollar Index Stirs Market Unease
Ahead of the opening bell on Wall Street, the U.S. dollar's strength stoked market jitters, with the U.S. Dollar Index (DXY) quickly falling to its lowest level since the fourth quarter of last year. Meanwhile, the Bitcoin-to-USD exchange rate (BTC/USD) continues to shrug off sudden moves in the US Dollar Index.
Sven Henrich, founder of NorthmanTrader, pointed out that the long-term chart of the U.S. Dollar Index performed as expected, showing a consistent channel trend. He believes that the US dollar index has experienced negative divergence at the top of the channel, which may become one of the key market drivers for the rest of the year.
U.S. 10-year Treasury yields soar
The U.S. 10-year Treasury bond yield surged above 4.8% on October 3, reaching its highest level since 2007. DoubleLine Capital CEO Jeffrey Gundlach said on social media that the spread between the 2-year and 10-year Treasury yields has narrowed rapidly, from 109 basis points a few months ago to 35 basis points. He warned that the situation could mean the risk of an economic recession.
Arthur Hayes, the former CEO of Bitcoin exchange BitMEX, warned in a recent social media discussion that governments may have to print a lot of money to save the bond market due to rapid spread widening, where long-term interest rates rise faster than short-term rates , may lead to corporate bankruptcy. Some investors believe this could trigger a bull run in the cryptocurrency market.
Bitcoin Analysis
Bitcoin rose above $28,142 on October 2, but the long shadow indicates aggressive selling by the bears. On October 3, the bears tried to extend their advantage, but the bulls held on near $27,160.
The EMA20 and relative strength index RSI indicate that bulls have the upper hand and buyers will attempt to break through the $28,142 resistance again, which, if successful, will complete a short-term double bottom with a price target of $31,485.
If the price declines again and breaks below the EMA20, it could lead to a drop to $26,000. Thereafter, the BTC/USDT trading pair is likely to continue to consolidate between $24,700 and $28,142
Ethereum Analysis
Ethereum (ETH) encountered resistance at $1,745 on October 2, which showed bearish market forces defending this level. Currently, EMA20 has been stepped on, and RSI is close to the midpoint, indicating that market supply and demand tend to be balanced. If the price rises and breaks $1,746, bulls may attempt to complete a double bottom with a price target of $1,960. On the other hand, if the price declines and breaks below the EMA20, the trading pair may continue to trade in the range of $1,530 to $1,745.
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