What a Rebounding Dollar Could Mean for Bitcoin and Altcoins

By Tony Spilotro

Both Bitcoin and altcoins have enjoyed a near-perfect environment for them to thrive, all based on the dollar’s weakness and decline. It has allowed these digitally scarce assets to rise significantly in 2020.

However, a rare signal suggesting that the dollar will soon reverse could put an end to the recent crypto bull rally. Here’s why.

The Dollar Isn’t Dying, And A Day Of Reckoning May Be Coming For Crypto

Unless you’re trading on a local regional exchange designed for just one country’s residents, chances are just about every asset listed trades against the dollar. It’s how the global reserve currency achieved its “almighty” status.

Because the dollar is tied to so many assets, almost all financial markets lie in the balance of the greenback. When the dollar is strong, equities tumble, precious metals lose their luster and crypto tanks.

During the Black Thursday flight to cash, investors so feverishly selling off assets in exchange for dollars is what sent asst prices tumbling that day.

Since then, however, the dollar has been in steady decline, allowing gold to set a new all-time high, silver to spring up, and stocks to recover to new records. Bitcoin broke above $10,000, and the rest of the crypto market has been booming with shocking month-over-month ROI.

Historic DXY and Bitcoin Relationship Warns Of Potential V-Shaped Drop

Because all assets are tied to the dollar, when investors are in profit, it is cash they turn to secure any paper gains. This type of behavior proves that cash is still the undisputed king, despite a very real challenge from other currencies, like the Yuan, gold, or Bitcoin.

And before that happens, there will be an epic fight to the finish. The most recent battle was won by Bitcoin, altcoins, gold, and silver, but the dollar is readying its revenge.

Since the trend has been down, this means the DXY could soon turn up. The DXY shows an inverse correlation with Bitcoin, meaning that when the dollar dives, the crypto market soars.

bitcoin btcusd dxy td9

DXY Dollar Currency Index Versus BTCUSD Chart Comparison | Source: TradingView

This also could suggest that as the dollar rebounds, crypto is in for a reckoning. But given the circumstances and challenges the dollar is facing, a rebound rally isn’t guaranteed despite what the highly accurate indicator may claim.

This was just a week or so following Bitcoin’s early bear market V-shaped drop. The DXY reversed so sharply, the 9 candle closed as a 1, indicating a new uptrend has begun and the count starts over.

bitcoin btcusd dxy

BTCUSD Chart With DXY TD 9 Buy Signals | Source: TradingView

The rebound from that move took Bitcoin price to approximately $11,750 at the top of the wick. Bitcoin was moments ago just rejected from the same area.

Via Newsbtc

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