Why is Bitcoin price down today?
price dropped below $26,000 on May 25 for the first time in two weeks.
BTC price fell 1.91% to $25,880, only to recover some losses afterward. Nonetheless, looking broadly, the price stayed on its short-term correction course, trading about 15% below its 2023-high of $31,000 in April.
What drove BTC price lower?
A stronger dollar appears to have reduced investors’ appetite for Bitcoin.
On May 25, the U.S. dollar index (DXY), a go-to metric to check the benchmark’s strength versus a basket of top foreign currencies, rose to over 104, its highest level in two months. Interestingly, the index has surged by 3.2% from its April low — inverse to Bitcoin’s trend in the same period.
As of this week, the dollar rebound has picked momentum due to its “safe haven” reputation against market uncertainty led by the U.S. debt ceiling negotiations, the banking crisis, and the global economy’s outlook.
Furthermore, short-term Treasury note yields have soared across the board, with the 1-year note offering 5.26% returns to its holders until maturity. That is a few basis-points away from a 23-year high, which theoretically reduces demand for non-yielding assets like Bitcoin in the short term.
U.S. 1-year government bonds yield monthly chart. Source: TradingView
For instance, Bitcoin funds witnessed more than $100 million worth of capital outflows in May, according to CoinShares’ weekly report.
Net flow into crypto-based institutional funds. Source: CoinShares
Long-term Bitcoin price analysis
From a technical standpoint, Bitcoin maintains its long-term bullish bias by holding above its 200-week exponential moving average (200-week EMA; the blue wave in the chart below) near $25,200.
A rebound from the wave support could have the BTC price eyeing $30,000-31,000 as its next upside target range.
Meanwhile, a high-volume move above the area could trigger the cup-and-handle breakout setup with a profit goal above $65,000 by late 2023 or early 2024.
Conversely, a decisive breakdown below the 200-week EMA puts price at risk of dropping toward Bitcoin’s multi-year ascending trendline support near $20,000 by the end of 2023, down about 25% from current levels.