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US Dollar Index Declines Further, Could Bitcoin Be Gearing Up for a Breakout?
The United States dollar index (DXY) has been in decline over the past four months, recording its largest plunge in years. As a result, bitcoin (BTC) could be on the cusp of a strong breakout.
It is reported that the correlation between a weak DXY and strong BTC has emerged multiple times in the past. In light of this, analysts are suggesting that such dips in the dollar’s value tend to benefit risk assets like BTC. These periods often signal early bull market phases and seasons of euphoria, as the market sees an influx of liquidity.
The dollar losing its safe-haven appeal is seen as a catalyst for investors to shift their capital towards alternative asset classes. This correlation has been well-documented in traditional finance: “As the dollar weakens and loses its safe-haven appeal, investors reassess their portfolio allocations and shift capital toward alternative asset classes.”
Bitcoin’s price remains within a 10% range from $100,000 to $110,000 since the end of May. At the time of writing, the digital currency is trading at around $108,800.
There are mixed opinions regarding Bitcoin’s potential for a significant correction or rally. Some analysts believe that the asset has a higher chance of surging, despite being in a consolidation phase.
Source: cryptopotato.com
