Bitcoin stands to enjoy further relief if its standard relationship to DXY weakness holds firm as the dollar shrinks on Fed “pivot” bets.
4386 Total views 29 Total shares Listen to article Bitcoin (BTC) may enjoy a familiar tailwind in the coming weeks and even beyond if new macro forces continue to play out. In a post on X (formerly Twitter) on Dec. 14, popular trader Crypto Ed, founder of trading group CryptoTA, eyed multimonth lows in United States dollar strength. Bitcoin and dollar strength have in the past exhibited inverse correlation. While this has decreased recently, changes to U.S. macro policy are now broadly seen to boost Bitcoin but pressure the greenback going forward. As Cointelegraph reported, the week’s macro data prints, combined with encouraging signals from the Federal Reserve, have analysts pointing the way to further crypto market upside in 2024. This is thanks to declining inflation potentially allowing for the Fed to “pivot” on interest rate hikes, increasing liquidity to the benefit of risk assets. An asset not set to enjoy the aftermath of the switch is the dollar, which has declined precipitously this week as macro figures showed the impact of monetary tightening on inflation. The U.S. Dollar Index (DXY) is down more than 2% since the start of the week, currently below $102 — its lowest level since mid-August. Commenting, Crypto Ed joined those who are optimistic about Bitcoin while predicting further downside pressure on DXY. “Long Term Outlook for DXY what will help BTC to teleport to new ATH’s,” he wrote, referring to new all-time highs for BTC/USD.Bitcoin trader targets sub-100 DXY dive
DXY down again today so far, and crude oil and other commodities getting a bit of a corresponding bounce.
The past 24 hours has seen a pretty remarkable repricing by the market of forward rate expectations. https://t.co/HmrZ8oXEfe pic.twitter.com/Wz9alU3hGe
— Lyn Alden (@LynAldenContact) December 14, 2023
Data from the Fed itself shows its balance sheet increasing for the first time since August in December — by around $2 billion.
BTC/USD meanwhile traded at $42,700 at the time of writing on Dec. 15, staying comparatively flat after brief volatility entered the day prior. The pair remains up 13% in December, per data from Cointelegraph Markets Pro and TradingView.
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