The price of Bitcoin is down this week. For now, it has fallen back below 110,000 USD, but there is a risk that it could also drop below the psychological threshold of 100,000 USD.
The problem is that this week a downward trend seems to have started and it has not yet ended.
Summary
The downward trend of Bitcoin’s price
On Thursday, September 18, the price of Bitcoin had closed above 117,000 USD.
However, the very next day it fell below this threshold, closing even below 116,000 USD before the weekend.
The weekend was calm, but starting from Monday a correction was triggered that seems to still be ongoing. Therefore, the downward trend began exactly seven days ago and has not yet concluded.
It must be said, however, that already at the end of August a similar situation had occurred, with a downward trend lasting exactly two weeks. That, however, was a simple post-ath correction, meaning after having marked new all-time high levels.
The lowest point of that correction was reached on August 29th below 107,500 USD, while in recent days it has not yet fallen below 108,000 USD.
The fact is that at the beginning of September there was a small rebound, thanks to which on September 16th the 117,000 USD were regained for the first time, and this rebound had brought a bit of optimism to the market. That optimism has so far proven to be unjustified, at least in the short term.
The Dollar Index (DXY)
These Bitcoin price movements have closely followed the trend of the Dollar Index, albeit in reverse, given the inverse correlation of BTC with DXY.
In particular, starting from Friday, September 5, the Dollar Index had resumed its decline, as it had already lost more than 10% since the peak on January 8.
That decline lasted until precisely September 16, with a loss of over 1.6% in less than two weeks.
It is likely that this drop in the Dollar Index was the cause of Bitcoin’s price rebound in the first two weeks of the month, and indeed as soon as DXY rebounded, BTC fell again.
In fact, starting from September 17, the Dollar Index rose from 96.7 points the day before to 98.5 yesterday. Today it is more or less steady at this level, but it is not certain that it will stay there for long.
Bitcoin Price Predictions
There are two contrasting forecasts regarding the trend of the Dollar Index, which could also influence the trend of the price of Bitcoin.
The first suggests that the rebound of DXY over the past ten days might not be over yet, in the short term.
In fact, the upper line of the descending channel that has lasted for eight months is currently positioned around 98.9 points, therefore there is even still a bit of room to rise while continuing to stay within the descending channel.
The second prediction, on the other hand, states that the medium-term descending channel could actually continue to hold until the end of the year.
Therefore, the hypothesis that could be put forward is that of a continuation of the mini upward trend of the Dollar Index in the short term, while in the medium term it might resume its decline.
If things actually go this way, one might expect that the ongoing decline in the price of Bitcoin could continue for a few more days, while in the coming months the bullrun might also resume.
The bull run
Even the hypothesis of a restart of the bull run of Bitcoin, in the medium term, stems from the forecast that the Dollar Index might resume its decline by the end of the year.
The fact is that in the long term, the Dollar Index has been within a descending channel continuously since the end of 2007, despite several fluctuations above and below the average trend.
It is very likely that this upward trend over the last 18 years has disadvantaged US exports and favored imports, ultimately significantly unbalancing their trade balance with foreign countries.
In fact, at the end of 2007, the US trade balance with foreign countries was negative by about 58 billion dollars, while at the beginning of 2024 it had decreased to -67 billion. With Trump’s electoral victory in November, there was a rush to imports before tariffs were applied, which led the US trade balance to record its worst figure ever, in March of this year, even reaching -136 billion dollars.
However, in July, with the tariffs already in effect, it was still negative by a significant 78 billion.
The only real solution seems to be a devaluation of the dollar, meaning the interruption of the ascending channel of the Dollar Index that has been ongoing since 2007.
At this moment, the lower line of this channel is positioned at approximately 96.5 points, which is not much lower than the 96.7 points reached on September 16.
If the Trump administration were to actually succeed in ending the existence of such an ascending channel, with the Dollar Index below 96.5 points for a sufficiently long period, the consequences on the price of Bitcoin should be very positive.
