With upward momentum waning, Bitcoin started to show overbought indicators across the board heading into the weekend.
Bitcoin struggled on Friday, trading below the $65K level as the USD continued exhibiting strength, remaining near the yearly high. Despite short-term volatility, support remains present and strong as high as $60K.
On Friday, the USD all but locked in its best week since May. This comes on the news of the highest inflation levels in decades, with "official" CPI figures declaring a 6.1% inflation rate.. but when accounting for actual scarce assets, real inflation is more likely in the range of 20 - 30% to date. This has investors speculating that central banks will likely raise interest rates in the near future, as they have been at historic lows since the COVID crash in March 2020.
As followers have seen from us before, we've shown a strong inverse correlation between Bitcoin and the US dollar. This is a rare correlation for Bitcoin, albeit inverse, but typically as the USD gains, Bitcoin falls, and vice versa. With the USD at a major cycle high and rampant inflation only gaining, it leads one to believe that the USD's rally is near its terminus, thus yielding another tailwind for Bitcoin.
With virtually all fundamentals and technicals flashing "Buy" for Bitcoin, another potential buy signal on the horizon is the Taproot upgrade, the first major technical upgrade to Bitcoin's blockchain in some time. It's forecasted that the upgrade will be activated within the week and could provide a further boon to Bitcoin's price, which is just a few percentage points shy of its current ATH around $68.5K.
