What the DXY's Price Means for Bitcoin
TLDR:
* There is an inverse correlation between the DXY and Bitcoin.
* Each percentage drop in the DXY could potentially cause a 5% increase In Bitcoin’s price (highly speculative, don’t call the Lambo sales office, yet).
* If this month’s inflation numbers will be below expectations, it could send the DXY below the 101.37 level and kickstart a mini bull run.
The Inverse Correlation between the DXY and BTC
* I am analyzing the DXY because of its inverse correlation with Bitcoin. My premise is that if the DXY loses the 100.37 support, it could push Bitcoin and the crypto market higher.
For example:
* On March 16th, 2020, the DXY tested the 100.37 level as resistance and began a 41-week (287 days) downtrend. The DXY’s drop was the signal for Bitcoin to begin the 2020 bull run.
* On the whole, between March 16th, 2020, and January 4th, 2021, the DXY lost 14% value while Bitcoin in the same period, went up by 845%.
Meaning that for every 1 percent the DXY lost, Bitcoin went up 60%
A more recent example:
* Between September 26th, 2022, until the 10th of April 2023, the DXY lost 12.4% of its value. * Bitcoin, during the same period, gained 69.35%.
Meaning that for every 1 percent the DXY lost Bitcoin went up 5.6%.
* These examples are only meant to illustrate the inverse correlation between the DXY and Bitcoin. I do not claim that correlation equals causation, nor do I claim that the DXY is the only influencing factor on Bitcoin’s price. Regardless, it is clear that if the Dollar index goes down, it is positive for the Bitcoin price.
DXY Analysis:
* The DXY is in a downtrend since September 22nd, 2022. This downtrend is forming a Descending Triangle. The 100.37 level is the Triangle’s support level. I am assuming that a drop below this level will hurt the DXY and could push Bitcoin into a mini-bull run. As far as the DXY is concerned it is 1.5% shy of disaster.
* Furthermore, the Non-Farm Payroll numbers published on July 7th caused a 0.9% drop in the DXY’s price but had no lasting effect on BTC’s price. I think that maybe, the Forex market is a more accurate gauge of Bitcoin’s Future prospects than we, in crypto, realize.
Conclusion:
* This is just scratching the surface, but enough for now. The DXY is in a downtrend and even if we assume that the rate hikes aren’t finished yet, the end is near. If this month’s inflation numbers will be lower than expected, I think the dollar is finished.
* If this month’s inflation numbers will be higher than expected then I assume that bitcoin will continue to chop in a range between 25K – 30K.
* There is an inverse correlation between the DXY and Bitcoin.
* Each percentage drop in the DXY could potentially cause a 5% increase In Bitcoin’s price (highly speculative, don’t call the Lambo sales office, yet).
* If this month’s inflation numbers will be below expectations, it could send the DXY below the 101.37 level and kickstart a mini bull run.
The Inverse Correlation between the DXY and BTC
* I am analyzing the DXY because of its inverse correlation with Bitcoin. My premise is that if the DXY loses the 100.37 support, it could push Bitcoin and the crypto market higher.
For example:
* On March 16th, 2020, the DXY tested the 100.37 level as resistance and began a 41-week (287 days) downtrend. The DXY’s drop was the signal for Bitcoin to begin the 2020 bull run.
* On the whole, between March 16th, 2020, and January 4th, 2021, the DXY lost 14% value while Bitcoin in the same period, went up by 845%.
Meaning that for every 1 percent the DXY lost, Bitcoin went up 60%
A more recent example:
* Between September 26th, 2022, until the 10th of April 2023, the DXY lost 12.4% of its value. * Bitcoin, during the same period, gained 69.35%.
Meaning that for every 1 percent the DXY lost Bitcoin went up 5.6%.
* These examples are only meant to illustrate the inverse correlation between the DXY and Bitcoin. I do not claim that correlation equals causation, nor do I claim that the DXY is the only influencing factor on Bitcoin’s price. Regardless, it is clear that if the Dollar index goes down, it is positive for the Bitcoin price.
DXY Analysis:
* The DXY is in a downtrend since September 22nd, 2022. This downtrend is forming a Descending Triangle. The 100.37 level is the Triangle’s support level. I am assuming that a drop below this level will hurt the DXY and could push Bitcoin into a mini-bull run. As far as the DXY is concerned it is 1.5% shy of disaster.
* Furthermore, the Non-Farm Payroll numbers published on July 7th caused a 0.9% drop in the DXY’s price but had no lasting effect on BTC’s price. I think that maybe, the Forex market is a more accurate gauge of Bitcoin’s Future prospects than we, in crypto, realize.
Conclusion:
* This is just scratching the surface, but enough for now. The DXY is in a downtrend and even if we assume that the rate hikes aren’t finished yet, the end is near. If this month’s inflation numbers will be lower than expected, I think the dollar is finished.
* If this month’s inflation numbers will be higher than expected then I assume that bitcoin will continue to chop in a range between 25K – 30K.
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