Real Vision analyst Jamie Coutts has pointed out a significant relationship between the value of the US dollar and Bitcoin‘s price movements. Sharing his insights on social media, Coutts elaborated on how fluctuations in the US Dollar Index (DXY) impact Bitcoin’s market performance. A closer look at current trading patterns reveals that a decrease in DXY could potentially trigger a Bitcoin rally.
Could a 3% Drop Spark a Rally?
The DXY measures the US dollar’s value against six major global currencies and is currently trading within a notable range. Coutts noted that a three percent decline from its current level of 104.52 could significantly uplift Bitcoin’s price. Specifically, a drop below the 101 level in DXY could act as “rocket fuel” for Bitcoin, potentially pushing it up by 127% to approximately $150,000 in this cycle.
Risk assets like Bitcoin generally benefit when the US dollar weakens, Coutts explained. The DXY reflects real-time market expectations regarding liquidity, and increased liquidity is advantageous for risky assets. The critical threshold to monitor is the 101/102 range in DXY, as a fall below this level could herald a strong bullish phase for Bitcoin.
What Could Happen in a Negative Scenario?
Coutts also highlighted a potential negative scenario. Should DXY strengthen and exceed the 106/107 range, Bitcoin could face downward pressure. This surge in DXY might drag Bitcoin’s price down to levels last seen in February, possibly reaching the $50,000 range.
Key Takeaways
Here are some crucial inferences for investors:
- A 3% drop in DXY could boost Bitcoin’s price significantly.
- Monitor the 101/102 DXY range for potential bullish signals.
- If DXY rises above 106/107, be cautious of a Bitcoin price decline.
At present, Bitcoin is trading at $66,189. According to Coutts, the short-term future of Bitcoin is closely tied to the movements in DXY. Investors should keep a close watch on these indices to make informed decisions.