Dollar Index Hits Dangerous Levels, Is Bitcoin Set to Soar?
With the U.S. Dollar Index (DXY) surging to a 26-month high of 110, Bitcoin (BTC) enthusiasts are keeping a close eye on what’s next for the pioneering cryptocurrency.
Historically, Bitcoin’s performance has been inversely correlated with DXY, prompting speculation that a critical moment for the digital asset may be around the corner.
DXY surges to 110, crypto experts sound alarm
Renowned cryptocurrency educator Quinten Francois pointed out the historical significance of DXY levels in a recent article. He also emphasized that when DXY falls, Bitcoin rises, predicting that this will happen in 2025.
“The last time DXY was this high, BTC was at $20,000. Something big is brewing,” he point out.
The comments reflect growing expectations within the crypto community that a DXY top could pave the way for Bitcoin to rise higher. On the other hand, cryptocurrency researcher HZ warned that the surge in the U.S. dollar index would bring broader risks.
“DXY is dangerous at 110. A few more points and the market would collapse. A surge in the dollar triggers a global credit crunch, strangling liquidity, destroying earnings and crushing emerging markets. If you overleverage, you’re on a trap On the door, “HZ warn.
Add to discussion, Financial analysis platform Barchart highhappy Hedge funds have been the most bullish on the U.S. dollar since the start of 2019. The sentiment reflects the dollar’s growing appeal as a safe-haven asset amid continued global economic turmoil. economic uncertainty.
Bitcoin and risk assets face critical test
Meanwhile, market research firm Capital Hungry noted that the surge in the U.S. dollar index was partly due to tariff concerns. It also highlighted that upcoming economic data will be critical to market direction.
Capital Hungry said: “If we see a decline in PPI on Tuesday or a neutral CPI on Wednesday, and the U.S. dollar index pulls back from its intraday highs in the short term, U.S. stocks and risk assets may receive bids.” Predictive.
This could create favorable conditions for Bitcoin to remain above $94,000 and potentially climb to $99,000 in the short term. However, a stronger-than-expected DXY could invalidate this scenario, pushing Bitcoin prices lower.
The movement of the U.S. Dollar Index has significant implications beyond cryptocurrencies. A strong dollar could put pressure on emerging markets and global liquidity, possibly triggering an economic slowdown. On the other hand, any signs of easing in the U.S. dollar index could ease pressure on risk assets, including Bitcoin.
August, Dollar index hits 2024 lows The decline coincided with a brief rise in Bitcoin. This reinforces the inverse relationship between the two assets. If the U.S. dollar index pulls back from its current highs, analysts believe Bitcoin could experience renewed upward momentum.
Institutional developments have further boosted optimism in the cryptocurrency market. Capital hunger highlighted BlackRock launches new BTC ETF (Exchange Traded Fund), which could significantly impact Bitcoin’s trajectory. The growing involvement of traditional financial giants such as BlackRock is seen as a major endorsement of Bitcoin’s legitimacy and potential for mainstream adoption.
Still, the cryptocurrency market is at a crossroads, and Bitcoin’s next big move could depend on the direction of the U.S. dollar index.
While the U.S. dollar index is currently exerting downward pressure on risk assets, a reversal could set the stage for a Bitcoin surge.
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