USD Index is Crashing; It Has Been Historically Bullish for Bitcoin

The USD index had a hell of a good time during the first quarter of 2020 when it surged to 103 level in March while the rest of the assets from gold, stocks, oil, to crypto everything tanked.

In fact, USD has been enjoying an uptrend since early 2018, which interestingly coincides with the bear market of Bitcoin and all the other cryptocurrencies.

Te greenback topped in March after the central banks around the world announced their ultra-loose monetary policy and started printing money like crazy. While USD started its downtrend from here, all the other asset classes began to appreciate in value, starting a mania that now has everyone calling it a bubble.

The USD Index started 2021 on a good note, soaring from its multi-year low of about 89 to almost 93.5 on March 29. Since then, it has been back in a downtrend, hitting 89.9 on Tuesday, a level that was last seen in late February.

And this is a good thing for the world’s largest cryptocurrency, Bitcoin, which has been relatively quiet after a big Q1 that took us from about $28k to $60k, as the market shifts its entire attention to Ethereum and the meme coins.

Bitcoin’s run-up in 2020 and early 2021 has been fueled by the changing macroeconomic conditions that brought in a new wave of institutional investors.

BTC vs the Dollar (DXY)
Source: CoinMetrics

With investors expecting the monetary easing to continue for longer than previously thought and inflation evident in the rising prices of food, lumber, iron, and other commodities, the dollar can be expected to weaken further, which has been historically good news for BTC, at least in the short term.

And while the price of Bitcoin continues to chop, trading in a range ever since February, it will give a healthier foundation for its next leg up. The fundamentals are strong as well, with hash rate, a proxy for network security, back to new all-time highs within a month of its big drop.

Elon Musk Considers Accepting Dogecoin As Payment For Cars in New Twitter Poll

Technically, activation for Taproot has officially begun, while Lightning Network capacity is also hitting new highs.

Not to mention things can change quickly in the Bitcoin market, and “a significant corporate treasury allocation could force a rotation, and that’s a move that would be risky to fade,” wrote traders CryptoCred and DonAlt in their weekly note TechnicalRoundup.

Sourse: bitcoinexchangeguide.com

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Category: News | Views: 104 | Added by: danyagames2007 | Tags: #Bitcoin #Bitcoin Price #BTC | Rating: 0.0/0
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