Bitcoin price chart shows ‘Elon Musk’ pump was an outlier — So what happens now?

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Bitcoin (BTC) has seen a very volatile week, as the price of Bitcoin jumped around from $32,000 to $38,500 and back toward $33,000 in a matter of 24 hours. 

The initial spike to $38,500 happened in minutes after Elon Musk added #Bitcoin to his Twitter profile.

However, no follow-up of that price movement was seen on the charts as Bitcoin dropped substantially in the following hours. Currently, the $34,500 area is a significant resistance zone to break through if the market wants to sustain the bullish momentum.

Failure to break $38,000 causing dropdown

XBT/USD 4-hour chart. Source: TradingView

The levels that are critical to watch are highlighted in the chart above. Simply put, $38,000 must break for the rally to continue. Flipping this level for support opens the door to new all-time highs.

However, the surge couldn’t be sustained yesterday. After the $38,000 level’s failure, the $34,000 level couldn’t provide the heavily needed support for further upward momentum.

Therefore, the “Elon Musk pump” can be considered an outlier, and the general trend continues. This is a downtrend since the peak high at $42,000 that most likely will continue unless Bitcoin’s price can break through $34,500 and flip it into support.

Dollar showing strength is bad news for Bitcoin

U.S. Dollar Currency Index 1-day chart. Source: TradingView

One of the primary arguments for more Bitcoin downside would be the recovering U.S. Dollar Currency Index (DXY). This index shows a potential bottoming formation as a bullish divergence is seen at the significant 90-point level.

After this, the bullish divergence will be confirmed through a higher low, indicating that more upside is likely.