Bitcoin price came under intense pressure this week as the VIX and the US dollar index (DXY) surged. It moved below the important support level at $20,000 and is trading at $19,125. The BTC/USD and BTC/GBP have crashed by more than 50% this year.
US dollar index surges
The BTC price has been in a steep sell-off in the past few weeks as the US dollar index has bounced back. According to Bloomberg, Bitcoin surged to $112.8, which was the highest level in more than 2 decades. This happened as the British pound dropped to the lowest level since 1987 and is now approaching the parity level.
The euro has dropped below parity and is at the lowest level in more than 20 years. Other currencies like the Swedish krona, Japanese yen, and the Swiss franc have also been in a steep downward trend lately.
The US dollar index strength continued after the Federal Reserve continued its hawkish tone this week. In its meeting, the bank decided to hike interest rates by 0.75%, bringing the year-to-date increase to 300 basis points. Notably, the officials warned that the bank will continue delivering jumbo rate hikes later this year.
The impact of the hawkish Fed became visible to the market as Bitcoin price crashed below $20,000. American stocks tumbled, with the Dow Jones, SP 500, and Nasdaq 100 indices crashed by more than 1.80% on Friday. Bitcoin has a close correlation with US stocks.
At the same time, bond yields continued soaring, with the 2-year yield rising to 4.2%, the highest level in more than a decade. 10-year and 30-year government yields rose to 3.68% and 3.61%, respectively.
Therefore, there is a likelihood that the BTC price will continue struggling in the coming days as the Fed maintains its hawkish tone.
Bitcoin price prediction
The daily chart shows that the BTC price has been in a strong bearish trend in the past few months. It has moved below all moving averages and crossed the important support level at $20,704, which was the lowest point on June 26. The Relative Strength Index (RSI) has moved slightly below the neutral point.
Therefore, there is a likelihood that Bitcoin price will continue falling as sellers target the next key support level at $18,000. A move above the resistance level at $21,000 will invalidate the bearish view.