The Bitcoin and crypto prices are influenced by a complex web of factors and intertwined indicators. One such influential force is the U.S. Dollar Index (DXY), which has gained prominence as a vital gauge for Bitcoin and crypto investors.
Over the past three years, BTC and the DXY have been mostly inversely correlated, except in times where crypto-specific factors overshadowed the dollar trends. Whenever the DXY experiences a decline, Bitcoin tends to embark on an impressive rally. Conversely, BTC usually falls when the DXY rises.
DXY Approaches Crucial Level
Since the local high of 104.7 on May 31, the DXY has dropped by nearly 3%. At the time of writing, the DXY stood at 101.8 and is now approaching the yearly low at 100.8 again, which served as support in February and April respectively and initiated a bounce to the upside.
As the renowned trader Gert van Lagen noted via Twitter, the situation for the U.S. dollar index is quite precarious. Van Lagen’s assessment, based on a detailed analysis of the DXY weekly chart, suggests that the US dollar is poised to continue its slide.
Lower lows, lower highs, and the failure to break the blue downtrend for several months all contribute to the bearish sentiment. In addition, the DXY has abandoned the green uptrend and is displaying a bearish confirmation of 3 consecutive weeks. According to van Lagen, a crash of the DXY below 89 could be imminent.
DXY on the verge of a breakdown | Source: Twitter
Will The Bitcoin Price Surge Sixfold?
Renowned crypto analyst “Coosh” Alemzadeh also recently took to Twitter to share an intriguing observation about the correlation between the DXY and Bitcoin’s price movements. Alemzadeh’s chart below highlights that during previous instances when the DXY slipped below the critical level of 100, Bitcoin experienced a remarkable surge.
In 2017, Bitcoin witnessed a 10x rally, and in 2020, BTC soared by 7x. Alemzadeh predicts that if history repeats itself and the DXY drops to 89 as it did in the past, Bitcoin could potentially see a substantial price increase of 4x to 6x. The entire crypto market is likely to profit. Alemzadeh shared the chart below and stated:
DXY weekly update: Looks like technical correction is complete which would align w/next BTC impulse initiating.
Bitcoin vs DXY | Source: Twitter
Remarkably, Jan Happel and Yann Allemann, the founders of Glassnode, have been sharing the same opinion for quite some time. Already at the end of May, the analysts suggested an ABC structure, which has been the main source of headwinds for BTC and other risk assets.
Their prediction was that once the DXY topps out, it will decline sharply, towards the 91-93 until the end of the year. “The decline should unfold in 5 waves likely into late 2023. This move should be very supportive of risk assets and particularly Bitcoin,” say the analysts who also predict the possibility of a blow-off top for risk assets.
DXY prediction | Source:
At press time, the Bitcoin price remained in its sideways trend, trading at $30,421.
Bitcoin remains in sideways trend, 4-hour chart | Source:
Featured image from iStock, chart from TradingView.com
Jake Simmons, a dedicated crypto journalist, has been passionate about Bitcoin since 2016 when he first learned about it. Through his extensive work with wncen.com and Bitcoinist.com, Jake has become a trusted voice in the crypto community, guiding newcomers and seasoned enthusiasts alike towards a deeper understanding of this dynamic field.
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His mission is simple yet profound: to demystify Bitcoin and cryptocurrencies and make them accessible to everyone.
With a professional career in the Bitcoin and crypto scene that began right after graduating with a degree in Information Systems in 2017, Jake has immersed himself in the industry. Jake joined the NewsBTC Group in late 2022. His educational background provides him with the technical prowess and analytical skills necessary to dissect complex topics and present them in an understandable format. Whether you are a casual reader curious about Bitcoin or an investor seeking to navigate the latest market trends, Jake’s insights offer valuable perspectives that bridge the gap between complex technology and everyday usage.
Jake is not just a reporter on technological trends; he is a firm believer in the transformative potential of Bitcoin over traditional fiat currencies. To him, the current financial system is on the brink of chaos, propelled by unchecked government actions and flawed Keynesian economic policies. Drawing from the principles of the Austrian school of economics, Jake views Bitcoin not merely as a digital asset but as a crucial step towards rectifying a failing monetary system. His libertarian views reinforce his stance that just as the church was separated from the state, so too should money be freed from governmental control.
For Jake, Bitcoin represents more than just an investment; it's a peaceful revolution. He envisions a future where Bitcoin fosters a sustainable and responsible financial framework for generations to come. His advocacy is not about opposition but about evolution, about laying the groundwork for a system that prioritizes transparency and equity over secrecy and inequality.
As a journalist, Jake’s articles are crafted with the precision of a scholar and the passion of a true believer. He provides not only news but also thoughtful analysis that connects the dots between daily developments and larger economic theories. His work is a beacon for those lost in the technical jargon often associated with crypto discussions, illuminating the practical implications and benefits of these technologies.
In summary, Jake Simmons is not just reporting on a revolution; he wants to be part of it, fully committed to enhancing public understanding and adoption of Bitcoin and cryptocurrencies. His work is more than just a collection of articles; it’s a resource, a guide, and a companion for anyone ready to explore the potential of this digital frontier. Whether you are taking your first steps into crypto or are a veteran looking to stay on top of the latest trends, Jake’s insights provide clarity and foresight in an often unpredictable industry. Join him on this journey to reshape the world of finance, one post at a time.
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