Bitcoin rose above the $21,000 level as the U.S. dollar index fell 0.7% during Friday morning hours.
Bitcoin broke above the $21,000 threshold during morning hours Friday, pushing other cryptocurrencies and crypto-exposed stocks into the green as well. The move up was likely driven by a slight drop in the U.S. dollar index, which fell roughly 1% today.
Crypto and Equities Surge Higher as BTC Potentially Heads for $23K
Bitcoin soared almost 10% in the past 24 hours to $21,069 driven by a slight drop in the U.S. dollar which has hit new multi-decade highs this year. The U.S. equities, which have been increasingly correlated with cryptocurrencies, are also up in the morning hours.
Furthermore, the world’s largest cryptocurrency fueled a rise up in other cryptocurrencies, with ether (ETH) climbing over 5% in the past 24 hours. Crypto-exposed stocks such as Marathon Digital (NASDAQ:MARA) and Riot Blockchain (NASDAQ:RIOT) are also up 10% and 8%, respectively.
Bitcoin’s jump comes just days after the cryptocurrency fell below the $19,000 mark for the first time since the Fourth of July. The drop occurred just a few days into the month of September, which has been historically known as the worst month for digital assets.
The number one cryptocurrency has been hovering around the $18,000 – $24,000 range since June as high inflation and rampant market volatility made it difficult for BTC to break above that level. Crypto exchange Luno’s Vijay Ayyar believes Friday’s leg up in crypto assets could represent a “bearish retest” of the $22,500 to $23,000 price range.
“Hence unless it breaks that level convincingly and closes above, I would still think this is a bearish rally that could see more ranging and downside,” Ayyar said.
– Vijay Ayyar, VP of Corporate Development & International at Luno
Weaker Dollar Boosts Crypto Days Before the Merge
In addition to cryptocurrencies, stock market futures were also up in Friday morning hours following a nearly 1% drop in the U.S. Dollar Index. Cryptocurrencies, which are increasingly correlated to equities, historically rose when the greenback weakens.
But despite the drop, the U.S. dollar remains considerably strong after hitting a 2-decade high late last month. The currency has notably benefited from the current macro environment involving sky-high inflation and persisting hawkish monetary policy by the Federal Reserve.
On the other hand, BTC has been largely outpaced by Ether in the recent period as investors await Ethereum’s long-awaited Merge later this month. The event, probably the most important development in the crypto industry this year, is set to transition Ethereum from the Proof-of-Work (PoW) to the Proof-of-Stake (PoS) model which will significantly increase its energy efficiency.