Bitcoin Is Now Directly Correlated With The US Dollar
March 17 2023 - 10:30AM
NEWSBTC
In the ongoing banking crisis in the United States, the US Dollar
(USD) appears to correlate directly with Bitcoin. Bitcoin
Positively Correlates With USD According to Kaiko, a digital assets
market provider, Bitcoin, the most valuable cryptocurrency, appears
to be moving synchronously with the USD as the market adopts a
wait-and-see approach amid fear of further turbulence in the United
States financial markets. Historically, #Bitcoin has had an inverse
correlation with the U.S. Dollar. Over the past month, this
negative correlation has mostly disappeared amid a wider market
rally. pic.twitter.com/Q9H0T4k51M — Kaiko (@KaikoData) March 17,
2023 Historically, Kaiko notes, Bitcoin moves inversely with USD.
That means whenever the USD rallies, Bitcoin tends to crumble. This
has been observed in the last few months, especially throughout
2022, resulting in what was known as the crypto winter. As
USD strengthened across the board in 2022, crypto prices, including
BTC, weren’t spared. To illustrate, Bitcoin crashed from as high as
$69,000 registered in November 2021, dropping below $20,000 in
November 2022. The crypto meltdown was made worse by the
collapse of UST, an algorithmic stablecoin by Terra, the crash of
several centralized finance projects like Voyager Digital and
BlockFi, and the spectacular fall of FTX, the Sam Bankman-Fried
exchange in November. Related Reading: Galaxy Digital CEO
Recommends Buying Crypto And Bitcoin Amid US Credit Crunch The
bankruptcy and failure of some of these platforms dented user
confidence, forcing a capital flight to safe havens beyond the
crypto markets to gold and the USD. At some point in 2022, for
example, DXY data, an index that tracks the USD, showed that the
greenback strengthened by over 20%. During that time, BTC
more than halved, demonstrating the relationship between the USD
and Bitcoin. The DXY measures the strength of the USD against
a basket of other currencies, including the Japanese Yen, Euro,
Chinese Yuan, and others. The index will rise if the USD is strong
and dip if it falls relative to these currencies. The Tide Is
Changing As of mid-March 2023, Kaiko observes that rallying Bitcoin
and crypto prices seems to coincide with the relative strengthening
of the USD; and is shifting. When BTC prices rose from $19,700 last
week to $26,300, the USD added 3% from late February 2023. The USD
holds firm despite questions being raised concerning the monetary
policy approach adopted by the Federal Reserve. There have
been more questions about the effectiveness and the speed of rate
hikes in the past few months. Although inflation is lower, it is
not at ideal levels. Related Reading: Bitcoin Blasts Past $26,500,
Gearing Up For Another Bullish Weekend The Fed aims to eventually
reduce inflation to around the 2% benchmark level. While critics
descend on the Fed, the USD is steady, syncing with Bitcoin, that’s
relatively higher. Feature Image From Canva, Chart From TradingView
TRON (COIN:TRXUSD)
Historical Stock Chart
From Aug 2024 to Sep 2024
TRON (COIN:TRXUSD)
Historical Stock Chart
From Sep 2023 to Sep 2024