The founders of cryptocurrency analytics firm Glassnode believe that the US Dollar Index (DXY) will soon decline and trigger a major Bitcoin (BTC) bull run. Glassnode co-founders Jan Happel and Yann Allemann shared their thoughts on the social media platform X.
The Influence of DXY on Bitcoin
DXY is a measure of the value of the US dollar against a basket of six major currencies. Investors closely monitor DXY because a weak index indicates that investors prefer risky assets such as stocks and cryptocurrencies over the dollar. An expert stated:
DXY is reaching its peak and signaling a possible end to Bitcoin consolidation. It is expected that the rise in BTC and cryptocurrencies will truly begin when DXY falls below 100. For now, we are at the peak of DXY and the consolidation in BTC has ended since April. A completely new environment is emerging for BTC. New highs are coming.
Based on their charts, analysts believe that DXY is forming a three-wave pattern labeled as the ABC wave of Elliott Wave Theory. They predict that DXY will drop below 100 before the end of the year and complete the C wave correction at the 89.34 level in the first half of next year.
The Rise of Bitcoin
The investor’s chart also suggests that as DXY falls, the iShares Russell 2000 ETF (exchange-traded fund) consisting of small-scale stocks will start to rise. Investors have previously mentioned how the strength of DXY has grown and created downward pressure on Bitcoin. An analyst stated:
The dollar is making a comeback. The dollar strength index has almost reached its highest point in a year. Contrary to the widely accepted bearish view of the dollar, this currently represents a potential consolidation phase and a strong change. DXY needs to calm down and retest its previous resistance as potential support for BTC’s recovery. However, as investors seek alternative assets to protect against slow economic growth, more market liquidity tends to benefit BTC in the long run.
Investors also referred to macro expert Henrik Zeberg’s prediction that the peak of DXY will be around 106 before the correction. At the time of writing this article, DXY was at 106.07. The analyst emphasized the following:
The upcoming reversal in DXY predicted by Henrik Zeberg could be the driving force behind the upcoming rise in BTC. It seems that the correction in Bitcoin since April 2023 is coming to an end.
