A Decrease in the Value of the US Dollar Would Significantly Boost Bitcoin’s Price.
Pointing to the current technical outlook of the USD, one crypto trader said that it seems to be forming a bear flag. While pointing to a chart, he said:
“DXY (US DOLLAR) – prior double bottom (W) setup looking more like a bear flag getting ready to break down – would be bullish for Bitcoin and precious metals.”
Since BTC has formed an inverse correlation to the USD, the potential downtrend that the analyst pointed to could significantly push the price of the digital currency higher, possibly settling well over the $12k hurdle point.
Ufuoma Ogono is a cryptocurrency writer with over 3 years experience in the cryptocurrency industry. She dedicates her time to sharing valuable information to members of the cryptocurrency community.
Bitcoin Increasingly Correlates with Gold as “Safe Haven”
At the beginning of this year, tales surrounding the potential status of BTC as a safe have asset were pervasive. However, the narratives became invalid after the digital currency plunged to the lows of $3,800 in March. Since then, it seems that these tales have now come to fruition, with Bitcoin increasingly becoming correlated to gold and precious metals.
This striking formation might be because of investors growing fearful about the looming inflation because of the excessive printing of new money. This has significantly increased the demand for scarce assets.
According to data from Skew – an analytics platform – the connection between Bitcoin and gold is now the closest it has ever been.
The one-month correlation of Bitcoin and gold peaked at about 69 percent just a few weeks ago, before it plunged to the current level of 49 percent. This is still a significant increase from its one-month annual rolling average of 12.8 percent.
- Bitcoin’s correlation to other markets has been shifting
- Bitcoin becomes closely correlated with gold and precious metals
- There is an imminent USD plunge, and it could push the price of Bitcoin and gold higher
As the world’s most dominant digital currency continues to establish its position as a top asset on the global stage, its correlation to other markets has been shifting. Bitcoin was closely correlated with the stock market in late February and early March, but the recent price action of the digital currency has broken that correlation.
The digital currency is now becoming closely correlated with gold and other precious metals. Interestingly, while Bitcoin is increasingly becoming a “safe haven” asset, it has been forming an inverse correlation to the US dollar. When the price of the US dollar plunges, it boosts the value of Bitcoin and gold significantly.
An analyst recently said that he is watching a bear flag forming on the daily chart of the USD, indicating that it is at the “verge of breaking down.” This possible upcoming decline would provide a major boost to Bitcoin, and it could push the price of the digital currency over the $12k mark.