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Bitcoin Fails at $12,000 – Downside Risk Could Be Ahead

The Bitcoin price has failed to close above the $12,000 level and is seeing a pullback today, alongside the price of gold. BTC is off -1.37% and the precious metal is lower by -0.37%. This is a small correction but traders should be wary of a deeper pullback.

The move lower in Bitcoin and gold is being driven by a bounce in the U.S. dollar, which was up yesterday and has seen another 0.25% bounce today. The U.S. dollar’s recent weakness has supported the price of anti-dollar pairs and the greenback was boosted by yesterday’s ISM Manufacturing data, which smashed expectations with a print of 56. The 50 level is the line in the sand for contraction in manufacturing and after beating the analyst expectations for 54.5, the manufacturing industry in the U.S. is moving further into expansion, supporting the hopes for a strong economic recovery.

The economic calendar today has only medium-level data sets, but one that will be watched is the ADP Employment figures, which will give an indication of the jobs market ahead of Friday’s Non-Farm Payrolls release. Initial jobless claims are released tomorrow and this will also drive the dollar. This evening also sees the release of the Federal Reserve “Beige Book,” which is released eight times per year. The Beige Book includes data gathered by the regional Federal Reserve banks on current economic conditions in each district.

For Bitcoin, the catalysts going forward will always be economic and driven by the dollar or monetary policy and the outlook for central bank digital currencies. Ethereum is currently outperforming BTC because it has a use case as the native blockchain for the boom in decentralized finance (DeFi) startups that have exploded onto the scene this year. 

Bitcoin Technical Outlook

The $12,000 level is a key obstacle for Bitcoin with the $12,500 highs from August 18th also blocking the path to $14,000. The failure at the $12k number is now risking a close below the price channel resistance and a close near $11,650 would be bearish going forward. The trend is still up and there is potential for support down to $11,000, but traders should be cautious and be careful of any swift move lower. Investing Cube runs one-to-one Trading Coaching, which is a great way to learn these techniques.

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