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Bitcoin: Correction or Reversal ?
Before anything ,
I have spent 8 years navigating the financial markets, with Level 3 CFA and a Master's in Finance under my belt, I've seen my fair share of trends. The current Bitcoin surge seems sentiment-driven, with investors potentially fearing a weakening dollar and seeking alternatives. However the possibility of a bubble can't be ignored.
The correlation between Bitcoin and the U.S Dollar Index (DXY) has historically been negative.This means that generally, when the value of the US dollar strengthens (DXY goes up), the price of Bitcoin tends to decrease, and vice versa.
Here's a breakdown of the relationship:
* Strong (DXY up) : investors might be more likely to hold onto dollars as a safe haven asset, leading to a decrease in Bitcoin's price.
* Weak (DXY down) : Bitcoin can be seen as a hedge against inflation or economic uncertainty, so its price might raise as the dollars weakens.
There are some nuances to consider, though:
* Strength of the correlation : The correlation isn't always perfect, and crypto-specific factors can sometimes outweighs the dollar's influence.
* Recent trends: While historically negative, the correlation has fluctuated recently.In late March 2024, there was a brief weakening of the negative correlation. However, it has strengthened again as of April 2024.
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- FINAL CONCLUSION : Today's US dollar news could put some downward pressure on Bitcoin in the short term, potentially slowing the bull trend, as Core PPI data , PPI m/m data and finally the Unemployment Claims data that all came better than their forecast
However, it's important to consider the boarder market context and other factors that could impact Bitcoin's price.
- TECHNICAL LEVELS : We can see the Bitcoin testing those levels in the next 3 days : 72,400-72,500 ; 71,200-71,600 and finally 70,400-70,600 ; if the price made lower levels than my forecast then we can say it's a reversal -not a correction- and the Bitcoin is going to drop it next -33% before halving !!
I have spent 8 years navigating the financial markets, with Level 3 CFA and a Master's in Finance under my belt, I've seen my fair share of trends. The current Bitcoin surge seems sentiment-driven, with investors potentially fearing a weakening dollar and seeking alternatives. However the possibility of a bubble can't be ignored.
The correlation between Bitcoin and the U.S Dollar Index (DXY) has historically been negative.This means that generally, when the value of the US dollar strengthens (DXY goes up), the price of Bitcoin tends to decrease, and vice versa.
Here's a breakdown of the relationship:
* Strong (DXY up) : investors might be more likely to hold onto dollars as a safe haven asset, leading to a decrease in Bitcoin's price.
* Weak (DXY down) : Bitcoin can be seen as a hedge against inflation or economic uncertainty, so its price might raise as the dollars weakens.
There are some nuances to consider, though:
* Strength of the correlation : The correlation isn't always perfect, and crypto-specific factors can sometimes outweighs the dollar's influence.
* Recent trends: While historically negative, the correlation has fluctuated recently.In late March 2024, there was a brief weakening of the negative correlation. However, it has strengthened again as of April 2024.
-------------------------------------------------
- FINAL CONCLUSION : Today's US dollar news could put some downward pressure on Bitcoin in the short term, potentially slowing the bull trend, as Core PPI data , PPI m/m data and finally the Unemployment Claims data that all came better than their forecast
However, it's important to consider the boarder market context and other factors that could impact Bitcoin's price.
- TECHNICAL LEVELS : We can see the Bitcoin testing those levels in the next 3 days : 72,400-72,500 ; 71,200-71,600 and finally 70,400-70,600 ; if the price made lower levels than my forecast then we can say it's a reversal -not a correction- and the Bitcoin is going to drop it next -33% before halving !!
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