Turning Point For Bitcoin And Crypto? DXY At 5-Month High

Jake Simmons

1 year ago

2 mins read

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In a crucial development for the financial markets, the US Dollar Index (DXY) has surged to its highest level since March, marking a pivotal moment for Bitcoin and the broader crypto sector. The DXY, which gauges the Greenback’s performance against a basket of six major currencies, has extended its gains above the 104.000 mark in the past four day, reaching a five-month peak at 104.907. At press time, the DXY was trading at 104.773.

From a technical standpoint, the DXY has exhibited a bullish bias, especially after surpassing the 200-day Moving Average (DMA) on Thursday last week. For the DXY to solidify its bullish stance, it needs to surpass the year-to-date (YTD) high of 105.882, which would then bring the 106.000 mark into focus. Surpassing this level could set the stage for the DXY to challenge the November 30 daily high of 107.195 and potentially rally towards March’s 21 high of 107.993.

However, on the flip side, if the DXY were to dip below 104.538, it could trigger a correction, targeting the 200-DMA (currently at $103.326). In the short term, while the DXY remains bullish, it must breach the 38.2% Fibonacci retracement level at $105.368.

DXY maintains bullish bias, 1-day chart | Source: DXY on TradingView.com

Renowned macro analyst Henrik Zeberg weighed in on the DXY’s trajectory, predicting that DXY bulls shouldn’t get too excited, “I just love this BEARISH – bullish move in DXY. Let the DXY Bulls get overly excited! Exactly what is needed for the reversal. 106.0 – 106.3 (is key).”

How Will Bitcoin Respond To DXY’s Strength

The inverse correlation between Bitcoin and the DXY has been a topic of interest in recent years. With the DXY’s recent surge, concerns are mounting about potential downward pressure on Bitcoin and crypto in the short-term. Some analysts believe that another uptick in the dollar could push Bitcoin towards the $23.500 mark, especially given the relatively low levels of open interest (OI) and volume for BTC.

Glassnode founders Yann Allemann and Jan Happel provided insights into Bitcoin’s outlook, noting, “Mid-term outlook: Favorable risk/reward, but short-term, uncertain ($25.8k – $26.8k). Possible downside ($23.8k – $24.8k) due to bearish trend. Signs of bottoming: RSI bullish divergence, fading volatility. […] We’re close to the bottom, but the environment is still unstable.”

Elaborating on the current market conditions, they added, “We’re in an unstable environment. Wait for the dip or buy the breakout. Bitcoin Risk Signal near extremes. $25.8k – $26.8k is No Man’s Land. The mid-term risk/reward is favorable for BTC and crypto.” Moreover, they predict that Bitcoin will bottom out in mid-September when the DXY reaches its top, setting Bitcoin and crypto up for a stellar October.

At press time, BTC price remained stagnant below $27,800.

Bitcoin price — BTC stalls below $27,800 | Source: BTCUSD on TradingView.com

Featured image from iStock, chart from TradingView.com

Jake Simmons

Jake Simmons, a dedicated crypto journalist, has been passionate about Bitcoin since 2016 when he first learned about it. Through his extensive work with NewsBTC.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.

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.

You can engage with his latest takes on Twitter: @realJakeSimmons.

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