- Bitcoin and precious metals could surge significantly higher if the USD downtrend deepens
- Analysts are expecting more USD downtrends
- Dollar currency index loses trendline dating back to great recession
Bitcoin News Today – The impact of the US dollar on the market this year cannot be overstated. Its heavy downtrend and weakness in the face of the global pandemic and a declining US economy have allowed assets such as precious metals, bitcoins, and equities to surge.
Nevertheless, the Dollar Currency Index (DXY) just closed a monthly candle below an over decade-long trendline dating back to the exit of the US from the Great Recession. This could mean more downtrend for the DXY, and further downside moves would only favor Bitcoin and other safe-haven assets.
Bitcoin (BTC) Price Today – BTC / USD
Safe Haven Assets Would Benefit from DXY’s Downtrend
All worldwide financial markets are somehow tied to the United States Dollar. The USD is the global reserve currency and the primary asset that all exchange rates are set against, and its decline can have an impact on all assets. A heavy dash into the USD on Black Thursday is what caused the massive decline in the price of Bitcoin towards the $3,800 mark.
Nevertheless, since then, the USD has been on a steady decline and almost all assets have returned to new highs or set new records. Analysts are warning that the debasement claims of the USD are over-exaggerated, and are expecting a bounce soon. However, the USD Index (DXY) just closed a monthly candle below a trendline that is over ten years, and this means that a heavy decline in the almighty USD has just started. If that is true, Bitcoin (BTC), precious metals, and equities will surge enormously.
Bearish Flag for the USD Could Turn Bullish for Bitcoin
As if losing the trendline was not bad enough for the reign of the USD, the greenback also seems to be following in an ominous fractal that hints at a much deeper crash and another bear market in the USD. A confirmation of the USD bear flag could pave the way for more gains for other assets, including Bitcoin (BTC) and digital currencies.
The fractal on the price action of DXY also follows a textbook bear flag pattern, complete with a long flagpole and an upward slanted parallel channel. The economic recovery means the USD would start to surge higher again. Comparing the long-term price action of the USD Currency Index with BTC shoes how a decline in the value of the USD could push the price of bitcoin significantly higher.
Bitcoin is currently correcting lower after a sharp increase to over the $12k mark. The digital currency is down by 5 percent over the day, at press time.