The almighty dollar and the once trending DXY is at an important inflection point, with the potential to cripple the blossoming bull market in Bitcoin and the rest of crypto, or propel it to new heights.
The Devastating Impact Of Dollar Dominance
2022 devastated cryptocurrencies and other risk assets due to the seemingly endless dominance of the dollar. The DXY Dollar Currency Index climbed to the highest levels since the inception of Bitcoin.
Because USD is one half of most cryptocurrency trading pairs due to the dollar being the global reserve currency, when the dollar is strong, the other side of the pair weakens.
As momentum began to turn down in the DXY, it started to turn up across crypto. The last few months have provided a much needed relief rally across the asset class, thanks to a falling USD.
After retracing back to COVID levels, the DXY is attempting to find support. But according to the MACD, momentum could prove to be too heavy for the dollar to defend against, leading to a bearish crossover on the one month chart.
Dollar momentum on the cusp of crossover, BTC in orange | DXY at TradingView.com
Bearish DXY Crossover Could Lead To Crypto Continuation
The DXY is a weighted basket of USD trading against GBP, JPY, and other currencies. The monthly DXY chart shows what could be a rebound in progress that the crypto market should be prepared for. However, if the MACD crosses bearish and confirms at the end of the month, it could cause bearish momentum to strengthen and create a dramatical decline in the dollar index.
This is especially important for Bitcoin, Ethereum, and the rest of the crypto market, as the DXY crossing bullish on the monthly MACD is what led to the recent crypto winter. If the MACD fails to confirm a bearish crossover and diverges upward instead, it could cause further collapse across crypto and other assets.
Bitcoin is up more than 40% to start 2023, and many cryptocurrencies have posted several hundred percent rallies. A bearish crossover in the DXY could mean continuation in the recent crypto uptrend.
All eyes across the world of finance should be on this important inflection point. What happens next with the dollar and crypto?
Follow @TonyTheBullBTC on Twitter or join the TonyTradesBTC Telegram for exclusive daily market insights and technical analysis education. Please note: Content is educational and should not be considered investment advice. Featured image from iStockPhoto, Charts from TradingView.com
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Tony Spilotro
I’m Tony Spilotro. Behind the pseudonym, I’m a digital media executive and global remote work leader with a decade of content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck – literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn’t yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can’t yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter and feel free to drop me a line if you would like to work together.
