As the greenback teeters at the edge of three-month lows, Bitcoin might witness the advent of a “parabolic curve”, marking a positive inflection in its price trajectory. Repoeting on this potentially paradigm-shifting trend, a popular trader known as Moustache suggested that the weakening US dollar could incite a rerun of BTC’s price history.
The inverse correlation between the strength of the mighty dollar and Bitcoin’s valuation, while evidently strong in the past, has softened through this year. However, recent volatility in the pattern has caught the attention of traders across the globe. Data collated from Cointelegraph Markets Pro and TradingView revealed that the US dollar index (DXY) might retest the support at 100, a level unseen in months.
After reaching last year’s highs of over 105, the greenback has bumped against considerable resistance. Its newfound tendency to dip threatens to solidify, especially if it breaches the crucial 100 support level. As such, Moustache argues, Bitcoin could be the ultimate beneficiary of this shift.
As market watchers keenly await a possible reversal in US interest rate hikes, the greenback has failed to curry favour. Further dampening the outlook for the dollar, the Consumer Price Index (CPI) statistics for June trailed behind market expectations, thereby pushing up demand for risk assets. Fellow trader Mikybull Crypto echoes the sentiment, predicting that the downward DXY trend could spur BTC/USD to touch $35,000 next.
Historically, when DXY traded at 100 around mid-April 2022, Bitcoin was priced around $40,000. With DXY once again looming around the 100 mark, some market participants anticipate a similar trend to re-enact itself. However, this prediction hinges on several macro-economic factors, and it’s crucial for investors and traders to exercise due diligence while making financial decisions.
Linking the state of DXY to Bitcoin’s performance in the post-halving world, popular trader Josh Olszewicz mentioned in a TradingView update: “DXY showing technical weakness coupled with a programmatic supply reduction of Bitcoin issuance may lead to an outsized price reaction for Bitcoin post-halving.”
Analysing the market from a wider lens, William Clemente, co-founder of crypto analysis firm Reflexivity Research, aligned DXY’s year-on-year change with the BTC/USD performance over the years. The interplay of these factors could send ripples across the crypto market, significantly impacting Bitcoin’s price action.
Conclusively, with multiple dynamics in play, the crypto market is poised at an interesting crossroad. The correlation between Bitcoin and the dollar, alongside other economic indicators, will hold significant sway over upcoming market trends. Regardless, the future of decentralized digital currencies like Bitcoin remains both exciting and promising.
Source: Cointelegraph
