It could still go either way for Bitcoin price action, but one analyst believes that Bitcoin is already outperforming stocks.
Bitcoin (BTC) may continue its “bear market”, says a trader amid hopes a US dollar reversal could soon improve BTC price action.
In his latest YouTube update on May 2, Cointelegraph contributor Michaël van de Poppe argued that the current rise in USD would not last long.
Bitcoin is still under pressure as both stocks and cryptocurrencies grapple with the reality of a major policy change from the US Federal Reserve.
Dollar Force Reversal “Close”
The Fed, due this week, intends to end the era of “free money” since the March 2020 COVID crisis for the last time, and risky assets should be the first to suffer.
The COVID crash saw the previous spike in the US Dollar Index (DXY), which then declined as Bitcoin pushed crypto markets to new highs.
That inverse correlation has since changed once again, and now, with DXY at twenty-year highs, cryptocurrencies are on the receiving end of the pain.
However, Van de Poppe notes that compared to previous DXY bull runs, Bitcoin has lost considerably less in USD terms. In 2014, for example, the BTC/USD pair lost more than 80%, while the drawdown from its all-time highs in November 2022 so far has only peaked at 55%.
“Right now, we’re seeing this implied strength, and I think the dollar is entering a period where that move is running out,” he said, adding that a reversal was “close.”
Nonetheless, Van de Poppe said that the “Bitcoin bear market could continue,” and if so, downside targets now extend beyond $30,000 to $25,000.
“Massive Speculative Excesses”
As for the long-term view, mainstream analysts continued to favor Bitcoin’s enduring strength after a period of future pain.
Speaking to Wall of All Streets podcast host Scott Melker on May 2, Mike McGlone, chief commodity strategist at Bloomberg Intelligence, said that a reset for crypto and traditional markets alike was “already happening.”
“This is a receding tide of massive speculative excesses across markets, cryptocurrencies were a great leading indicator and now we are turning the tide and it is a question of how far,” he explained.
“This week, the Fed will raise 50 basis points for the first time in years; I could go back and check, but I haven’t seen that in a long time.”
As before, McGlone, however, predicted that Bitcoin would ultimately benefit from the next turmoil.
“I think that will be part of the trigger that will take out the rest of the excesses in the market, especially stocks, and then Bitcoin will come out ahead, and it is already happening,” he added.
His prediction last January was that, “markets eventually pull back and we have a 10-20% correction in the stock market. All correlations are one, which is how it usually works. bitcoin is better off for it.”
The BTC/USD pair was trading at $38,900, according to data from Cointelegraph Markets Pro and TradingView.
By Audy Castaneda
