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Bitcoin (BTC) dropped to $20,000 more than a week ago. As we already described in our Discord group, the price has since fluctuated around this price. Bitcoin briefly rose yesterday and rose above USD 20,000 last night but was rejected there.
This morning bitcoin also failed to hold on to $19,900 and the price is currently dropping to $19,700 on Binance and $19,900 on Bitvavo. This means that the bitcoin price is currently 0.5% in the minus.
Bitcoin trading volume increased 18% in the past 24 hours. Bitcoin’s total market cap stands at $377.8 billion and its dominance at 38.7%.
Labor Day and rising DXY
The United States celebrates Labor Day today and that means that American stock exchanges are closed. This also applies to stock markets such as the S&P 500 and the Nasdaq, with which bitcoin has a high correlation this year. This means there is a good chance that we will see little volatility today.
On the other hand, the price of the US dollar index (DXY) continues to rise. The DXY even reached a new high of 110.25 and the dollar is gradually worth more than the euro. If this continues, then it is likely a bad sign for the riskier assets, including bitcoin. The DXY has a very high negative correlation with these assets this year.
Low reserve risk for bitcoin
The reserve risk of bitcoin is a metric that compares the bitcoin price with the total number of long-term investors (also known as HOLDers). Long-term investors are defined as bitcoin holders who have not moved their coins for at least a year. The more of these there are, while the price remains low, the lower the reserve risk is.
Below is the reserve risk of bitcoin. The reserve risk is low if it is in the green zone. Currently, bitcoin is at an extremely low risk level according to this metric (a level below 0.001). The risk level is currently lower than the March 2020 market crash and the 2018 bear market and even lower than the trough during the 2015 bear market.
A low reserve risk can indicate undervaluation and therefore an attractive risk/return. However, accumulating and finding a bottom during a bear market can be a lengthy process.
How deep can bitcoin fall?
Il Crypto Capo, a well-known bitcoin analyst, is still very bearish about the course. Although he expects a small recovery to $23,000 at first, he fears the price will see a new low can look up. That can be as low as $15,000 to $16,000.
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