The relationship between other market forces and Bitcoin has for long been the guiding force of the market. Investors believe that the inverse relationship between Bitcoin and Equity, Bitcoin, and the US dollar, Bitcoin, and gold has forever been shifting the price up to and down.
However, the most important factor that has been playing a crucial recently is the US dollar. Not just the Bitcoin, but the entire global economy is dependent on the US Dollar price. Now, it's more important than ever to watch out for their relationship and see where it takes the market.
In the last few months, since the world was hit by the pandemic the impact has been more visible than ever. The US Dollar price has been consistently increasing and this has caused other markets to fall.
Since then the market crashed and Bitcoin became people's go-to go Safe haven. Not just Bitcoin but the Gold price also saw a surge and rose considerably. Though, this downward spiral continues the prices of the US Dollar are picking up again. Learn more about cause of US dollars on bitcoin by clicking on bitcoindigital.io
This price hike though is a good sign, is causing other asset prices to fall. For instance, the biggest brunt has to be borne by the Commodity and the Crypto market if the DXY continues to rise beyond it.
Now, if we go back in time we can see that this trend was earlier witnessed in 2014 and 2017. During this time, the prices of Bitcoin hit an all-time high and a clear correlation could be seen between the US dollar and Bitcoin at that point. So, there is no getting away from the fact that the US Dollar has a huge impact on Bitcoin prices.
So, the times during which the US dollar shows weakness could be considered as a Golden period for Bitcoin as it sees unprecedented price hikes. To add it up, we can see the DXY index as another trend moving this market.
So, now that the DXY index is again picking up which is causing the market to gain strength. In the past the DXY index has pushed down Bitcoin prices, so is history going to repeat itself?
If we do a thorough analysis of this trend, we will see that the gold has been strengthening since its price hit the rock bottom in 2000. This is because the first phrase that comes after a market is crashed is the liquidation phase. In that, the market picks up quickly as it happened with Gold when it recovered 30% of its cost in that year itself.
Following, a similar trend, the markets are always running after liquidity to help recover the prices. Even, the equity and stock market are striving to follow the same trend as their way to regain strength.
If you had been smart enough to invest in Gold in 2000, you would have strengthened your portfolio to the tune of 600%. It was during these credit crises only, that investors switched to USD and caused its price to rise.
However, the situation is quite different this time. For starters, the increasing debts, the high level of deflation, and constantly high-interest rates are causing Bitcoin to flourish. The market will crash initially and the downfall of 20 to 30% could be expected. But mind you, after that the prices are expected to hit sky high as they will be the only haven left.
It's a period of high economic turmoil and volatility and even government forces aren't being able to influence the trend. The pandemic and lockdown situation anyway caused the economy to suffer a lot and that made people lose faith in the government-regulated industries.
In this case, too balance this out government might need to devalue the USD and if that happens we know where to put our money to reap the best benefits.
