Is the dollar index hitting a new high in 2021 dangerous for Bitcoin?


The recent tensions in the stock market and the macro world have caused the U.S. dollar to soar to a new high in 2021, just as Bitcoin continues to set new records.

But is the awakening of the dollar a dangerous situation for cryptocurrencies, or is something else happening?

As DXY hits a new high in 2021, BTC hardly reacted

Bitcoin price After breaking through the highs set earlier this year, it is currently in price discovery mode. Cryptocurrency is considered to be an alternative to gold, even the U.S. dollar-the current global reserve currency.

Cryptocurrencies, commodities, and everything else are priced in the U.S. dollar as the main currency, as the basic exchange rate. This means that the price of Bitcoin is inversely proportional to the U.S. dollar on the BTC/USD trading pair.

Related Reading | 10 bullish Bitcoin monthly price charts starting in October

Therefore, it is unusual for Bitcoin to continue to hit new highs while the DXY USD currency index reaches the highest level for the whole year of 2021.

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

A stronger U.S. dollar keeps Bitcoin prices low

DXY is a weighted basket Of foreign exchange currencies are traded against the U.S. dollar (USD). The basket includes major trading partners Euro (EUR), Japanese Yen (JPY), British Pound (GBP), Canadian Dollar (CAD), Swiss Franc (CHF) and Swedish Krona (SEK).

The highs of DXY may indicate weakness in the currencies in the basket, or the strength of the dollar itself.Bitcoin’s current performance or Lack of strong response After hitting a new high, it is more likely that the strengthening of the U.S. dollar hinders cryptocurrency.

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

Both of these assets are likely to hit annual highs, and it may indicate that one or both parties of the BTC/USD pair are brewing a greater reaction.Bitcoin price also happened to hit the trend line This kind of reaction happened in the past.

Related Reading | Want to learn technical analysis?Read NewsBTC trading course

one Uptrend is defined As a series of higher highs and higher lows-characteristics of these two assets in the short term. The very difference between the two is the long-term trend. For Bitcoin, the main trend has been rising, while the U.S. dollar has been falling.

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

After the short-term trend is complete, each asset should resume its previous trajectory, unless the trend is ready to change for a long time in the future.

follow @TonySpilotroBTC on Twitter Or join TonyTradesBTC Telegram Exclusive daily market insight and technical analysis education. Please note: The content is educational and should not be considered investment advice.

Featured image from iStockPhoto, Charts from TradingView.com





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