Under the influence of the recent collapse of digital money companies and banking problems, bitcoin investors will face another potential challenge: the dollar has been restored.

The dollar is strong again.

In particular, the US stock index, which tracks the dollar against a basket of key currencies, has risen 4 per cent from its bottom of 100.82 on Feb. 3, as the market predicts that the US Federal Reserve (Federal Reserve) will continue to raise standard interest rates to cool inflation.

Inflation persists

With the latest US data showing that the economic downturn is not urgent, caution still exists.

It mainly includes the latest total number of unemployment benefits, which fell by 2000 in the week to Feb. 25 to a seasonally adjusted 190, 000, and stronger consumer spending in January.

In addition, 90% of u.s. manufacturers surveyed by Bloomberg news complained that the price of capital investment was still rising, even though the supply chain crisis had eased.

Although the problem is not as serious as it was during the pandemic, the data survey reported that although the Fed took the initiative to raise interest rates at its meeting, inflationary pressures did not abate.

Federal Reserve Governor Christopher Waller stressed: "recent data show that consumer spending has not slowed down so much, the human resources market continues to remain unsustainable, and inflation is not falling as fast as expected."

"if these reports are again overly popular, the policy target section will have to rise even more this year."

Global research at us financial institutions estimates that the fed meeting will raise interest rates to nearly 6 per cent from the current 4.5 per cent 4.75 per cent. In theory, it should put downward pressure on "riskier" assets such as Bitcoin, thereby rebuilding investors' demands on the dollar.

DXY data charts produce upside-down heads and shoulders.

From a professional point of view, because it constitutes the most typical upside-down pattern, the US stock index is expected to rise by more than 4.5% in the coming months.

This pattern occurs when the price is a common resistance line (resistance level) that produces three troughs, with the middle trough (top of the head) deeper than the others (left arm and left arm).

When the price raises the collar and rises to the minimum standard and the maximum height of the collar room, the head and shoulder flip pattern design will be solved in time.

If the DXY index successfully breaks through the resistance level of 105.25, the probability of extension and recovery to 109.75 in 2023 will be higher.

Retest the Bitcoin market price for $20,000?

When the dollar strengthens, rising bitcoin winners are unable to maintain the rise in the price of bitcoin and cannot increase the technical pressure level of $25000. Since then, the price of bitcoin has fallen by about 13%, with macroeconomic disadvantages being one of the main reasons.

More importantly, anxiety about the video of the Silvergate incident and the potential harm to the industry have controlled prices in the past.

"all anxiety about liquidity will have a direct impact on the current state of the market and may affect the availability and availability of funds for some customers," warned Robert Toro, head of stand-alone trading at the Digital assets Exchange.

Technically, Bitcoin can maintain its short-term upward trend based on two key index moving averages (EMA): the 50-day daily average (bright red) is close to $22500 and the 200-day daily average (dark blue) is close to $21770.

But traders should be concerned about the probability that they are likely to fall below the moving average, and with higher interest rates and more negative news, Bitcoin prices are likely to retest the key $20,000 support line in the coming weeks.