The crypto market faces a downturn due to global economic factors. However, analysts are closely watching the US dollar index (DXY), as its recent shifts suggest that Bitcoin might rebound. Historically, steep DXY drops have aligned with Bitcoin hitting a low, then surging upward. Experts believe Bitcoin could rally if this pattern continues. Some predict a potential price breakout toward record highs. Investors are now monitoring the DXY-Bitcoin correlation and looking for confirmation of this trend.
Bitcoin Decline Amid Economic Concerns
Due to primarily global economic concerns, Bitcoin Drops Below $90K, and the crypto market have declined in the past weeks. First, the US Federal Reserve’s (Fed) interest rate cuts have negatively affected the market. Second, tariffs and the global trade war have led to a massive decline in risk asset markets. Historically, the crypto market has been sensitive to global economic tensions and economic announcements like rate cuts or inflation metrics. As such, the BTC value fell 10% in two weeks.
DXY Crashes Shaping Bitcoin’s Price
This week, the US dollar index (DXY) shows one of the sharpest declines since 2013. Data points to November 2022 as the previous example of a sharp fall in the US dollar index. This 2022 sharp decline was caused by the FTX disaster, which also pushed BTC to a bottom. However, Bitcoin’s price has been moving opposite from the DXY. As such, crypto investors hope this development will cause a surge in risk assets like cryptocurrencies.
Other than the 2022 crash, the DXY has also had two different instances of sharp falls. The first crash was in 2015 when the economic market was in decline, and BTC was trading for $250. Next was the collision in 2020 amid the increased financial pressure fromCOVID-199. The US dollar index experienced four standard deviations in all three examples, and Bitcoin hit a bottom in value.
BTC Bullish Trend After Dollar Drop
After creating a bottom, BTC always had a reversal in price movement and started a bullish price trend. For instance, in 2022, Bitcoin hit the bottom of $15,00 in its price before experiencing a trend reversal. The US dollar index has fallen over 3% since March 3, from 107 to 103. This 4-point decline is a possible signal to investors that a crypto rally must be on the way. Other connections between DXY and BTC reaffirm this analysis.
DXY-Bitcoin Bullish Signal
Based on Chart 1, Crypto analyst Merlijn The Trader has analyzed the DXY Bitcoin correlation. As per her analysis, whenever a bearish Moving Average Convergence Divergence (MACD) for DXY was recorded, BTC experienced a surge. Furthermore, Daan Crypto Trader, another crypto trader, has also reaffirmed this bullish view with his own Bitcoin price prediction.
Road to $120K What Needs to Happen Next
Daan Crypto’s Bitcoin price prediction shows that if consolidation around range lows continues, a future all-time high of $120000 is possible. He further explained that we have seen this pattern in other consolidations in the current cycle. This pattern starts with BTC breaking even lower but stopping its fall, re-taking the range again, and moving higher.
Bitcoin’s Key Consolidation and Resistance Levels
Investors should watch Bitcoin’s consolidation and resistance. Holding critical supports at the current level could trigger a breakout. Caution remains essential as economic policy shifts and regulations still influence market sentiment. Investors navigating volatility should use diversified strategies and risk management while tracking macroeconomic signals. If the DXY keeps falling and interest rates rise, Bitcoin could enter a sustained bullish phase.
Conclusion
Global economic concerns are causing the cryptocurrency market to decline, but economists are optimistic that Bitcoin will rise again, particularly given the decline in the US dollar index (DXY). According to historical patterns, a declining DXY may portend a spike in the price of bitcoin. Because retaining present support could lead to a breakthrough, investors should watch for consolidation and essential resistance levels. Although caution is advised, Bitcoin may begin a prolonged bullish phase if the DXY keeps declining.
