Bitcoin price hits 10-week low as $40,000 spike becomes 'nasty bull trap'

bitcoin ( BTC ) hit its lowest level in more than two months later on May 5, as Wall Street trading saw volatility return with a vengeanc...


bitcoin (BTC) hit its lowest level in more than two months later on May 5, as Wall Street trading saw volatility return with a vengeance.

BTC/USD 1-day candle chart (Bitstamp). Source: Trading View

DXY celebrates as stocks and crypto tumble

Data from Cointelegraph Markets Pro and TradingView painted a troubling picture for hodlers as BTC/USD fell to $36,520 on Bitstamp.

Capping the losses, which totaled 8.3% at one point, Bitcoin only rebounded to a price last seen on February 24 of this year.

As Cointelegraph reported, the performance went hand in hand with chaos in american markets as stocks gave up earlier gains to turn the economic outlook down. The Federal Reserve’s “built-in” rate hikes therefore seemed to have been a kind of red herring.

“BTC drops below 37,000 after a nasty bull trap yesterday. Good lesson for those still insisting on fighting the trend,” said the popular Cheds trader. reacted day.

At the time of writing, BTC/USD was trading at around $37,000, having recovered a modest chunk of lost ground in the first two hours of the Wall Street session. By comparison, the Nasdaq 100 was down 4.5% and the S&P 500 was down 3.2%.

Even the news that the Blockchain protocol Terra had bought a $1.5 billion giant of BTC to support its stablecoin TerraUSD (UST) failed to lift morale.

“Can you imagine how disastrous it will be for central bank credibility (confidence in the fiat system) if this stock market continues to loosen in the coming weeks and they have to aggressively reverse policy by a month or two. Trust is already in shambles…,” podcast host Preston Pysh commented as relative stability returned.

The stock has been a boon for the US Dollar, meanwhile, as seen the US dollar index (DXY) reversing earlier losses to retest its highest levels in twenty years.

DXY stood near 104 at the time of writing, up 1.2% on the day.

US Dollar Index (DXY) 1 hour candle chart. Source: Trading View

Bulls feel the most pressure since January

Amid the chaos, previous bullish theories on BTC spanning longer timeframes have themselves undergone a major test.

Related: BTC ‘more likely’ price to hit $100,000 before Bitcoin sweeps lows of $30,000, forecast suggests

Among them was the one based on the on-balance volume (OBV) of Bitcoin.

OBV, a cumulative volume measurement used to identify buying and selling pressure, has, in fact, called BTC’s price higher from lows of $32,000 in January, according to popular Twitter account IncomeSharks earlier on May 5.

A series of higher lows since had given the impression that serious declines could be avoided based on OBV data.

As Cointelegraph reported, however, $30,000 price targets or lower in the coming months has only increased in recent weeks.

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