Over the last two days, Bitcoin’s price has awakened from its Snow White sleep. NewsBTC reports that the Bitcoin price rallied shortly after DXY (the Dollar Index) suffered weakness.
Bitcoin and the dollar index were inextricably correlated for much of 2022. The DXY rose steadily, and fiat currencies all over the globe were declining. However, the USD was growing in strength. The Bitcoin price suffered from this trend, which was also very negative. A strong USD means a weak Bitcoin. On Tuesday, the inverse correlation was again evident.
The DXY may experience a prolonged period of weakness, which could lead to more momentum in favor of the bitcoin market. This is despite its short-term bullish bias. Today (Thursday), which is the European Central Bank’s (ECB) report on future policy and American GDP numbers, will be an important day in this regard for the Bitcoin Market.
Bitcoin price at the Navel of Central Banks
The DXY shows that the dollar is at a near-monthly low against a basket currency in which the Euro weighs in at 57.6%. It is believed that the U.S. Federal Reserve may reduce rate increases to offset recession risks.
Rodrigo Catril of National Australia Bank was a senior currency strategist and told Reuters there were two factors fundamentally still in favor of the U.S. Dollar: rate differentials, as well as the fact that the Fed has more work ahead. His short-term outlook is different.
But certainly near term, given how much was priced (in), we’ve seen a bit of retracement in the dollar. […] Our sense is that it’s a bit of a consolidation of the recent moves rather than extension of further dollar declines.
Today’s GDP numbers may encourage the FED to stick to its current policy and not hit the brakes just yet.
Therefore, whether the Bitcoin price can continue its rise will also depend on today’s release of gross domestic product (GDP) figures in the US. These numbers will be closely monitored by the Federal Reserve (FED).
According to analysts, the US economy will have expanded by 2.4% during the third quarter. This may indicate that the FED’s interest rate rises have not had a detrimental effect on the economy.
Catril stated that the ECB will need to state its position today. “The question is whether they want to show that full commitment to the inflation mandate, or whether they show weakness or concerns in terms of what looks to be a challenging growth outlook.”
Ahead of today’s announcements, the Bitcoin price is in a wait-and-see mode while showing a small correction after the recent spike.