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bitcoin gold stocks metals crypto dollar usd dxy
Nexo Logo

Bitcoin, Metals, And Equities “Will Fly” If Dollar Downtend Deepens

Tony Spilotro by Tony Spilotro
2 years ago
in Bitcoin, Cryptocurrency news, Technical analysis
Reading Time: 3 mins read
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The dollar’s impact on markets in 2020 cannot be overstated. Its weakness and decline in the face of the pandemic and a dwindling US economy, has allowed assets like Bitcoin, precious metals, and equities to surge.

However, the DXY Dollar Currency Index just closed a monthly candle below an over decade-long trend line dating back to the United States’ exit from the Great Recession. And it could mean more downside ahead.

DXY Loses Trend Line Dating Back To Great Recession

All global financial markets are tied to the United States dollar in some way. As the global reserve currency and the primary asset that all exchange rates are set against, it can have a dramatic impact on all assets.

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Related Reading | Why The Dollar’s Coming Dead Cat Bounce Could Be Devastating For Bitcoin

A mad dash into the dollar on Black Thursday is what prompted the catastrophic market collapse that took Bitcoin back down to $3,800 and crushed the stock market.

Since then, however, the dollar has been on a steady downtrend and nearly all other assets have revisited highs or set new records. Analysts are warning that the dollar’s debasement claims are over-exaggerated, and are expecting a bounce soon.

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dxy bitcoin gold metals stocks equities dollar usd correlation

DXY Dollar Currency Index Monthly Trend Line | Source: TradingView

But the DXY Dollar Currency Index, a basket of top forex currencies weighted against USD, just closed a monthly candle below an over decade-long trend line that could suggest the fall of the almighty dollar has only just begun. If this is true, “Bitcoin, metals, and equities will fly.”

dxy bitcoin gold metals stocks equities dollar usd correlation

DXY Dollar Currency Index Bear Market Fractal | Source: TradingView

Bitcoin Could Rip Toward A New All-Time High If Dollar Bear Flag Confirms

As if losing the trend line wasn’t dangerous enough for the dollar’s reign, the greenback also appears to be following in an ominous fractal that hints at a much deeper crash and another bear market in the dollar.

Related Reading | What Does The Dollar’s Do Or Die Moment Say About Bitcoin?

A bear market in the dollar could mean a bull market in several other assets, including Bitcoin and cryptocurrencies.

dxy dollar currency index bitcoin bear flag

DXY Dollar Currency Index Bear Flag Fractal | Source: TradingView

The fractal on DXY price action also follows a textbook bear flag pattern, complete with a long flagpole and an upward slanted parallel channel.

After the bottom trend line breaks down from a bear flag, selling picks up in severity and drives the asset’s price to new lows. The bottom trend line of the bear flag is the same trend line dating back to when the US came out of the Great Recession.

The economic recovery meant the dollar began to boom again. At the same time, however, Bitcoin was born.

Comparing the long-term price action of the DXY with Bitcoin shows how a fall in the dollar could send the cryptocurrency much higher. The last significant fall in the greenback led to Bitcoin’s $20,000 top – could this next drop create yet another crypto bubble?

DXY Dollar Currency Index Bitcoin BTCUSD Comparison Chart | Source: TradingView

A 15 point fall from roughly 103 to 88 on the index took Bitcoin from under $1,000 to $20,000. The bear flag target on the DXY lies at roughly 64 points by measuring the length of the flag pole.

Tags: bitcoinbtcbtcusdBTCUSDTcashcryptodollardxyunited statesusdxbtxbtusd
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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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