Bitcoin Clings on to $22,000 as US Dollar Strength Rise to December Levels – Now What?

Bitcoin (BTC) fell to a three-week low on March 8, as stronger-than-expected employment data out of the United States dampened risky assets.

BTC/USD 1 day candlestick chart (Bitstamp). Source: TradingView

Employment stats boost Fed hawks, BTC price falls

Data from Cointelegraph Markets Pro and TradingView showed that BTC/USD on Bitstamp fell to $21,858.

The pair was trying to hold $22,000 as support at the time of writing, while traders’ downside targets were still a long way off at $21,300.

“Bitcoin is not showing the strength I initially wanted to see (a slight uptick occurred yesterday),” said Cointelegraph contributor Michaël van de Poppe, founder and CEO of trading firm Eight, In summary.

“In that case, look for some more downside momentum to sweep the lows at $21.2K before a bounce. If we want $30,000, $23,000 is needed.”

BTC/USD annotated chart. Source: Michael van de Poppe/Twitter

Fellow trading account Daan Crypto Trades, meanwhile, argued that the volatility was due to movements in Bitcoin futures markets.

“Huge bidding depth on the Binance futures pair. Combined with a decent increase in Open Interest,” he said revealed on the day.

“Keep in mind that walls can be deceptive where they can be pulled away at any moment. It feels like a bigger movement is coming, no matter the direction.”

Macro events produced mixed results when it comes to moving crypto markets.

An appearance by Federal Reserve Chairman Jerome Powell before the US Congress the day before sparked no reaction, but that day’s job data sent the mood downhill.

“Expectations were 197K in working people. The actual number is 242,000, which is more positive than expected,” says Van de Poppe wrote in a section of comments on the day’s nonfarm employment gains.

“For risk investors, not great as we just heard that Powell wants to raise rates further in 2023.”

Such “hot” employment numbers confuse traditionally risky assets, as they imply that the Fed has more leeway to keep financial conditions tight for longer.

Dollar soars to two three-month highs

Estimates of how far the Fed would walk at the next meeting of its Federal Open Market Committee (FOMC) on March 22 showed increasing uncertainty about declining inflation.

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Instead of 25 basis points as in February, the market now favored a larger rate hike of 50 basis points, according to data from the CME Group’s FedWatch Tool.

Graph of probability percentages from the Fed. Source: CME group

The US dollar index (DXY) also had a potential unwelcome surprise in store for Bitcoin bulls.

After a strong session on March 7, the index consolidated the day after reaching 105.88 – its highest level since December 1, 2022.

“Watch the DXY…there’s a near perfect setup for a negatively anomalous higher high above 106, then at least a major pullback, or the dump below 100 has started,” investor David Brady responded.

US dollar index (DXY) 1-day candlestick chart. Source: TradingView

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