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dollar bitcoin high dxy strength
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Is The Dollar Index Making New 2021 Highs Dangerous For Bitcoin?

Tony Spilotro by Tony Spilotro
9 months ago
in BTC
Reading Time: 3 mins read
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The recent nerves in the stock market and macro world has caused the dollar to surges to a new 2021 high, just as Bitcoin continues to set new records. 

But is the greenback’s awakening a dangerous situation for cryptocurrencies, or is something else afoot?

BTC Barely Reacts As DXY Taps New 2021 High

Bitcoin price is in price discovery mode, after breaking its former high set earlier in the year. The cryptocurrency is pitched as a replacement for gold, and even the dollar – the current global reserve currency. 

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Cryptocurrencies, commodities, and everything else are priced in dollars as the most dominant currency acting as the base conversion rate. This means that Bitcoin price increases inversely to the dollar on the BTC/USD trading pair. 

Related Reading | 10 Bullish Monthly Bitcoin Price Charts To Start November

So it is unusual that Bitcoin continues to tap new highs all while the DXY Dollar Currency Index has reached the highest level of all of 2021. 

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dxy dollar currency index

The dollar currency index has reached a new 2021 high | Source: DXY on TradingView.com

The Dollar Strength Keeps Bitcoin Price At Bay 

The DXY is a weighted basket of forex currencies trading against the US dollar (USD). That basket includes major trade partners, the Euro (EUR), Japanese yen (JPY), British pound sterling (GBP), Canadian dollar (CAD), Swiss franc (CHF), and the Swedish krona (SEK).

The highs in the DXY could be indicative of weakness in the currencies in the basket, or strength in the dollar itself. Bitcoin’s current performance or lack of strong reaction after new highs, could more so be due to strength in the dollar holding the cryptocurrency back. 

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Not every touch of this trend line has been pleasant.  | Source: BTCUSD on TradingView.com

Both assets making yearly highs is highly suspect, and could suggest a bigger reaction brewing in one or both sides of the BTC/USD pair. Bitcoin price also happens to be touching a trend line where such a reaction occurred in the past. 

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An uptrend is defined as a series of higher highs and higher lows – something characteristic of both assets in the short term. What is very different between the two, is the longer term trend. For Bitcoin, the primary trend has been up while for the dollar has been down. 

One of these assets is in an uptrend, the other is not | Source: BTCUSD on TradingView.com

After this short term move completes, each asset should resume its previous trajectory, unless the trend is ready to change for a long time to come. 

As bullish as I am on #Bitcoin, I can’t shake seeing this trend line touch. It’s worth some caution. I’ve added a Black Thursday fractal to convey the danger. If this happens, it just means a later and higher peak for the cycle. I still aim for sooner than later tho! pic.twitter.com/fPd7faDZb5

— Tony "The Bull" Spilotro (@tonyspilotroBTC) November 11, 2021

Follow @TonySpilotroBTC on Twitter or join the TonyTradesBTC Telegram for exclusive daily market insights and technical analysis education. Please note: Content is educational and should not be considered investment advice.

Featured image from iStockPhoto, Charts from TradingView.com
Tags: bitcoinbtcbtcusdBTCUSDTcryptodollardollar currency indexdxyxbtxbtusd
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter at @tonyspilotroBTC and feel free to drop me a line if you would like to work together.

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