Bitcoin breaks horizontal resistance around $32k. The rally raised more than $35,000.

Bitcoin has broken horizontal resistance around $32k and an extended rally above $35k should be of concern as Bitcoin diverges from the US dollar.

Bitcoin investors are excited to see the cryptocurrency jump to new highs for the year. More precisely, Bitcoin traded above $35k for the first time in over a year.

He did this with trip stops around $32k. This area provided resistance for some time, and Bitcoin finally broke above.

This is good news for bulls.

The bad news is that by doing this, Bitcoin differs from the rest of the fiat currencies. More precisely, when Bitcoin gained from the US dollar, the greenback rose against its peers.

It may or may not be something to worry about. But if I were an investor in Bitcoin (I'm not), I would be worried. This is the reason.

Bitcoin Chart by TradingView

As of Q1 2023, Bitcoin and the US Dollar will diverge.

Bitcoin's problem is that the dollar will strengthen against its peers from Q1 2023. Two examples are the EUR/USD and AUD/US exchange rates, which reached record highs during the first quarter of the year.

EUR/USD, for example, reached a high of 1.12 and is now moving towards 1.06. AUD/USD has erased all gains from October 2022 lows.

Bitcoin is the last one standing against the dollar. While bulls may say that Bitcoin is only normal because it is not correlated with macro risks and positions, I beg to differ.

Because Bitcoin is part of many institutional portfolios, it responds to macros. Therefore, the rally we see here may reverse unless the strength of the US dollar dissipates. It only makes sense for Bitcoin to rally if the dollar starts to weaken.

Until then, caution is needed.