A top analyst known for calling Bitcoin (BTC) bottoms is warning that the rallies witnessed by the crypto markets to start the week may been a bull trap.
Pseudonymous analyst Bluntz tells his 279,800 followers on the social media platform X that Bitcoin looks short-term bearish after failing to rally above 0.618 Fibonacci level.
Traders use Fibonacci levels to identify potential support and resistance levels.
Says Bluntz,
“Gut is telling me these early-week crypto pumps might have been a trap.
Had a good look at DXY and ES (S&P 500 E-mini futures) today and gave myself a bit of a reality check.
Weekly divs on both were confirmed and BTC so far rejecting from the 0.618 Fib.”
Source: Bluntz/X
At time of writing, Bitcoin is trading for $62,087, a fractional decrease on the day.
According to Bluntz, Bitcoin’s pullback comes as the US dollar index (DYX), which tracks the value of the US dollar against a basket of major fiat currencies, is flashing signs of strength. He shares a chart suggesting that the DXY has confirmed a bullish divergence on the weekly chart, indicating that the US dollar is poised for rallies.
Source: Bluntz/X
Meanwhile, Bluntz says the S&P 500 is printing a bearish divergence – a potential reversal signal.
Source: Bluntz/X
The DXY has historically been inversely correlated with the movements of risk assets. When the DXY is strong, it suggests that investors are unloading assets such as Bitcoin and stocks in favor of the US dollar.
At time of writing, the DYX is hovering at 102 points while the S&P 500 is trading at 5,751.
Generated Image: Midjourney
