Roughly 10 weeks ago, CoinDesk discussed a double top bearish reversal pattern in bitcoin (BTC), warning of a sell-off to $75,000 in a move typical of a bull-market pull back.
On Monday, the price dropped below that level as escalating trade tensions cratered financial markets, sending Dow Jones Industrial Average futures lower by a whooping 900 points. According to technical analysis theory, the BTC sell-off could run out of steam between $70K and $75K, as discussed in January.
STORY CONTINUES BELOW
Besides, the Australian dollar (AUD), a commodity currency particularly vulnerable to Trump-led global trade tensions, is offering hope to crypto bulls. The AUD/USD pair has recovered to 0.6011 after dropping as low as 0.5930 earlier Monday, according to data source TradingView. The pair was the worst hit on Friday, falling over 4%, a big move for a national currency.
When trade tensions escalate, currencies of nations involved in the tussle typically react quickly due to expected changes in trade balances, economic conditions and interest-rate expectations. The AUD is one such currency. As the home currency of commodity exporter Australia, it’s seen as a proxy for China, one of the country’s biggest customers. So, the sharp recovery in the AUD could be a sign of tariffs-led sell-off reaching climax.
That said, bottom fishing in a falling market is akin to catching a falling knife, a risky strategy.