A combination of recent nervousness in the stock and macro markets has seen the dollar rise to new highs in 2021, as Bitcoin keeps setting new records.
But is the greenback’s awakening a dangerous situation for cryptocurrencies, or is something else afoot?
BTC Reacts to DXY Taps 2021 New High
After breaking the previous high earlier this year, Bitcoin is now in price discovery mode. The cryptocurrency is pitched as a replacement for gold, and even the dollar – the current global reserve currency.
As the base currency, all cryptocurrencies and commodities are listed in USD. The BTC/USD trade pair means that Bitcoin prices rise in the opposite direction to the dollar.
Similar Reading: 10 Bullish Monthly Bitcoin Prices Charts to Start November| 10 Bullish Monthly Bitcoin Price Charts To Start November
It is not common for Bitcoin to continue reaching new heights while DXY Dollar Currency Index reaches the highest level in 2021.
Source: DXY at TradingView.com| Source: DXY on TradingView.com
Bitcoin Prices Held at Bay by Dollar Strength
DXY (weighted) is a basket of foreign currencies that trade against the US Dollar (USD). The basket also includes the Euro, Japanese yen and Canadian dollars (CAD), Swiss Frank (CHF), Swedish krona(SEK), as well as major trade partners such the Euro (EUR), Japanese Yu (JPY), Canadian dollar/CAD, Canadian dollar (CAD), Swissfranc (CHF), Swiss francs (CHF), etc.
DXY’s highs could indicate weakness in other currencies or strength within the US dollar. Bitcoin’s current performance or lack of strong reaction after new highs, could more so be due to strength in the dollar holding the cryptocurrency back.
This trend line is not always pleasant.Source: BTCUSD at TradingView.com | Source: BTCUSD on TradingView.com
The possibility of both assets reaching yearly highs could be a sign that there is a larger reaction in the BTC/USD pairs. A trend line that has seen such an reaction in the past is being touched by Bitcoin’s price.
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An uptrend is defined as a series of higher highs and higher lows – something characteristic of both assets in the short term. The longer-term trend is what is most important between them. Bitcoin’s primary trend is up, while that of the dollar is down.
These assets are in an uptrend while one isn't. Source: TradingView.com – BTCUSD| Source: BTCUSD on TradingView.com
If the trend continues, assets should return to their previous position after this temporary move.
So bullish am I? #Bitcoin, I can’t shake seeing this trend line touch. It’s worth some caution. I’ve added a Black Thursday fractal to convey the danger. This is a higher and later peak of the cycle if it happens. However, sooner is better than never! pic.twitter.com/fPd7faDZb5
— Tony “The Bull” Spilotro (@tonyspilotroBTC) November 11, 2021
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Featured Image from iStockPhoto. Charts from TradingView.com