Bitcoin and the U.S. Dollar are intricately linked, with the Dollar Index (DXY) playing a pivotal role in this relationship. Historically, as global investors seek safer havens, Bitcoin tends to dip when the dollar strengthens. Recent charts suggest this trend might persist, with Bitcoin hovering at critical support points while DXY shows signs of potential recovery.
Is the U.S. Dollar Strengthening?
The Dollar Index has been on a downward trajectory for months but is now trading near 98.9 as it attempts a rebound. Having recently tested its 50-day EMA, it’s approaching the 100-day EMA mark. Despite an overall bearish outlook indicated by a downward-sloping 200-day EMA, recent gains hint that dollar strength might not be fully exhausted yet.
If DXY ascends towards the psychological threshold of 100.0, risky assets like Bitcoin could face pressure. Currently consolidating between its 100-day and 200-day EMAs around $112,000, Bitcoin’s chart reveals vulnerability. Trading volume has decreased since surpassing $128,000, and September’s mid-month bounce from the 200 EMA lacked strong momentum. With an RSI at neutral level of 49, there’s no indication of an oversold condition that could trigger a significant reversal.
Bitcoin’s Potential Decline
If DXY continues its upward movement toward higher levels like those between points 100 & 101, Bitcoin may retreat to around $106, which aligns with support from its 200-day EMA . The inverse correlation remains evident: A stronger dollar often leads to weaker performance for digital currencies such as bitcoin . Traders should monitor how far into resistance zones dxy advances because breaking through these areas would increase selling pressures against bitcoins leading them test lower supports again
Conversely if dxy weakens reverting back downwards trendline then btc may find room regain momentum pushing upwards once more Early signals indicate growing strength within US currency however continued progress might spell trouble crypto markets A breakout above key levels potentially trigger another major downturn digital gold