It's been almost a rally of decent two continuous weeks where the crypto market was usually moving without having much volatility. Still, yesterday the crypto market along with Bitcoin and Ethereum have fallen down significant percentages. The reason that this fall could be that the US Dollar is strengthening and it is at the critical level of the medium-term resistance and a possible breakout from that level.

Crypto Market Overview

As you can see in the picture below that Bitcoin dominance is at 38.42% which is down below the previous critical level of 40%, which was acting as strong support for the dominance but it is broken now. And about the Fear and Greed Index of Bitcoin, it is at 33 down by 10 points since the last week and now up by 3 points in the last twenty-four hours.

At the rightmost part of the picture, we can see the comparison between the long and short positions on Bitcoin at various crypto exchanges like FTX, Binance, and others. Currently, the overall percentage of longs on Bitcoin across all the exchanges is 43.05% and 56.95% which clearly shows the dominance of bears in the leverage market.

Why Crypto Market Crashed?

As already mentioned, one of the reasons behind this Bitcoin and crypto fall is that the US Dollar is strengthening and that is having an adverse effect on the entire crypto market. Because of this, Bitcoin has fallen down to the monthly opening and that is not a good sign. You can check the chart below showing the DXY (US Dollar):

And as you can see that US Dollar is about to break out from the medium-term resistance, if this break-out is confirmed then we might see another fall in the crypto market. So keep your eyes on this chart and look for the break-out confirmation or for the fakeout.

Why Not Go Short Now?

After reading this you might think of going short on the crypto market but you might reconsider that because the Funding Rates are going back into the negative zone and that will make current users late bears and they might lose significant if not properly manage their positions and in an extreme scenario, they might get liquidated. The liquidation scenario will be when Bitcoin manages to stay above the $21k support and if it could not hold that level of support then it might turn into a good trade. But again, since the Funding Rates are turning back negative, this makes opening new short positions very risky. So, before taking any leveraged trading decision think again.

Conclusion

As discussed, US Dollar is strengthening and trying to break the current resistance and if that happens successfully then it will affect the entire crypto market negatively so be careful while trading and at the same time funding rates are getting negative, it will be very risky to go short at this time. So be cautious about your trades and trade only if you are open to the risks.

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Thanks For Your Time!