Bitcoin Poised to Benefit from Potential U.S. Dollar Weakness
Summary:
Bitcoin (BTC) might experience a positive shift due to macroeconomic conditions, observes Crypto Ed, a renowned cryptocurrency trader. He noted a decrease in U.S. dollar strength, which could potentially boost Bitcoin's value while putting pressure on the dollar. Economist Lyn Alden pointed out that liquidity conditions are not yet ideal to support a wide-scale surge in risk assets. However, the Federal Reserve's balance has increased for the first time since August, and Crypto Ed predicts Bitcoin reaching all-time-highs with a further dip in the U.S. Dollar Index.
BTC (Bitcoin) might benefit from some established momentum in the weeks to come due to macroeconomic factors. Cryptocurrency trader Crypto Ed, who also leads the CryptoTA trading group, shared on X (formerly Twitter) his observation on the multi-month dip in the strength of the U.S. dollar on December 14. He suggested that Bitcoin might be inversely correlated with the strength of the dollar, a phenomenon that may lead to a rise in Bitcoin's value and simultaneously apply downward pressure on the dollar due to changes in U.S. macroeconomic policies.
Market data from the past week, together with optimistic signals from the Federal Reserve, leads analysts to predict an upward trend for the crypto market in the coming year. A potential decrease in inflation could allow the Federal Reserve to reconsider interest rate hikes, thereby improving liquidity to the advantage of risk assets.
However, the dollar might not fare as well with the monetary policy switch given it has already seen a drastic drop this week following the announcement of the tightening of monetary measures that impacts inflation. The U.S. dollar index (DXY) has fallen by over 2% since the week commenced, now sitting below $102, a level not seen since mid-August.
Crypto Ed asserts that Bitcoin will benefit from the current situation while predicting an additional downward spiral for DXY. His analysis suggests that BTC will reach unprecedented highs with DXY dipping to $92. A chart accompanying his post pointed out the key DXY levels to watch out for on a 3-day scale.
In terms of liquidity, economist Lyn Alden isn't quite convinced that the current conditions favor a wide-scalable renaissance in risk assets. Nonetheless, Alden did point out just a few days later that the markets are registering a "significant repricing" in anticipation of a possible reduction by the Federal Reserve in 2024's rates.
Meanwhile, data from the Federal Reserve shows an increment in its balance sheet for the first time since August of this year by about $2 billion. As of writing time on December 15, BTC/USD is trading at $42,700, remaining stable after some minor volatility the day before. The duo is still up 13% for December, according to data from Cointelegraph Markets Pro and TradingView.
This report does not provide financial advice or recommendations. Every investment and trading decision involves risk, and individuals are advised to do their own research before making any investment choices.
Published At
12/15/2023 11:46:36 AM
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