According to its historical data, Bitcoin’s price performance has displayed an inverse correlation with the DXY, which is now sparking speculation that the digital asset may be at a turning point.
Crypto Experts Sound Alarm as DXY Soars to 110
Quinten Francois, a famous crypto educator, noted in a recent post on X the historical importance of DXY levels. He also pointed out that when the DXY falls, the price of Bitcoin rises, predicting a similar situation in 2025.
“The last time DXY was this high, BTC was at $20,000. Something big is coming,” he said.
Comments on this reflect a growing anticipation within the crypto community, with some expecting the DXY high to potentially pave the way for a Bitcoin rally. Separately, HZ, a crypto researcher, sounded the alarm about the broader risks associated with a sharply rising DXY.
“DXY at 110 is dangerous. A few more points and the markets will collapse. A rising dollar triggers a global credit crisis, kills liquidity, destroys profits and crushes emerging markets. If you are over-indebted, you are standing on a trapdoor,” HZ warned.
The financial analytics platform Barchart also participated in the discussion, emphasizing that hedge funds have been the most bullish on the US dollar since early 2019. This sentiment reflects some appeal of the dollar as a safe haven amid current global economic uncertainties.
Bitcoin and risky assets face key tests
Meanwhile, Capital Hungry, a market research firm, pointed out that the rise in DXY was partially fueled by tariff fears. She also highlighted upcoming economic data as crucial to market direction.
“If we see a lower PPI on Tuesday or a neutral CPI on Wednesday, a short-term bearish retracement of the DXY from intraday highs, US stocks and risk assets could find purchase,” Capital Hungry suggested.
This could create favorable conditions for Bitcoin to hold above $94,000 and potentially climb to $99,000 in the near term. However, a stronger-than-expected DXY could reverse this scenario, pushing BTC lower.
-Movements in the DXY can have significant repercussions beyond crypto. Indeed, a strong dollar can put pressure on emerging markets and global liquidity, potentially triggering economic downturns. Conversely, any signs of DXY easing could provide some respite for risk assets, Bitcoin included.
In August, DXY hit its 2024 low during a decline that coincided with a brief rally in Bitcoin’s price. This reinforced the inverse relationship between the two assets. So, if the dollar index retracts from its current highs, analysts believe that Bitcoin could see further bullish momentum.
Optimism within the crypto market is also reinforced by institutional developments. Capital Hungry highlighted the new BTC ETF launched by BlackRock, which could significantly influence the trajectory of Bitcoin. The growing involvement of traditional financial giants like BlackRock is also seen as a major endorsement of the legitimacy of Bitcoin and its potential for adoption by the general public.
Nonetheless, the crypto market remains at an important crossroads, with the next major move in BTC price now potentially depending on the direction of the DXY.
With the dollar index currently putting downward pressure on risk assets, a reversal could therefore set the stage for a Bitcoin surge.
Moral of the story: When an index goes up, at least one crypto goes down.
Disclaimer
Disclaimer: In accordance with The Trust Project guidelines, BeInCrypto is committed to providing unbiased and transparent information. This article aims to provide accurate and relevant information. However, we encourage readers to verify the facts on their own and consult a professional before making any decision based on this content.
