Forget Elon, here’s why Bitcoin traders should be watching the US Dollar Index instead

Forget Elon, here’s why Bitcoin traders should be watching the US Dollar Index instead

If you’re looking for a way to get into Bitcoin trading, then you’ll be happy to hear that the price of one Bitcoin has dropped from $4,500 to $4,000 in the past few days. This is because the negative Bitcoin news coverage has been getting worse, and as a result, more traders are now considering selling their coins to reduce their losses.

The US Dollar Index is the most popular measure of how the U.S. Dollar is trading against other currencies. For instance, the US Dollar Index is used to determine how much interest rates change when the US Dollar depreciates. You can also use it to determine how much your Bitcoin or Ethereum is worth in real cash. You’ll find it featured at the bottom of nearly every crypto exchange and on most forms of financial analysis.

In the Spring of 2017, the world’s most valuable cryptocurrency lost almost half of its value in one moment. It was called the “Great Crypto Crash”, with thousands of altcoins crashing in value. The world’s most famous digital currency, Bitcoin, lost more than 50% of its value from a peak of $20,000 in early December of last year to a low of $6,500 in early February of this year. And yet, for all of Bitcoin’s crash, it has remained the most valuable currency in the world. In fact, it is now more valuable than ever. To understand why, you need to understand how the Bitcoin market works and what drives its price.. Read more about bitcoin price and let us know what you think.

Bitcoin (BTC) prices fell nearly 5% on June 4. and continued to fall Friday as investors became concerned about Elon Musk’s tweets about cryptocurrencies, leading to speculation that the Tesla CEO might dump the remaining 43,000 BTC. #Bitcoin pic.twitter.com/lNnnEfMdtJf – Elon Musk (@elonmusk) June 4, 2021 However, bitcoin’s downward move also coincided with a significant jump in the US dollar index (DXY), leading to speculation that more than one factor accelerated the cryptocurrency’s sharp decline late Thursday and early Friday. The rebound saw the U.S. dollar index, which measures the greenback’s strength against a basket of major foreign currencies, rise 0.18 percent to a three-week high at 90.627 following Musk’s tweet. Meanwhile, the price of bitcoin fell 9.31% over the same period to an intraday low of $35,593. The chart below shows bitcoin’s immediate reaction to Musk’s tweet – a big red candle on the hourly chart, followed by a prolonged decline. However, the dollar not only reacted to Musk’s anti-bitcoin tweet, but also began to rise on sustained bids in traditional markets, eventually posting its biggest one-day gain since September 2020. Bitcoin’s decline after Musk’s tweet also coincided with a rise in the US dollar index market. Source: TradingView Forget Elon, here’s why Bitcoin traders should be watching the US Dollar Index instead Experienced cryptocurrency traders consider bitcoin an anti-dollar asset, mainly because the cryptocurrency acts as a safe haven against fiat devaluation. This discourse has gained popularity, especially after the global market collapse caused by the COVID-19 pandemic in March 2020. This event led the Federal Reserve to adopt unprecedented support measures, including interest rates near zero and unlimited bond-buying programs, to protect the U.S. economy from the effects of the pandemic. Meanwhile, the U.S. government has launched three consecutive stimulus packages – $2.8 trillion in March 2020, $900 billion in December 2020 and $1.9 trillion in March 2021 – to help Americans via direct check payments, and likely more. Monthly change in U.S. government debt since April 2020. Source: Statista Forget Elon, here’s why Bitcoin traders should be watching the US Dollar Index instead Expansionary policies have increased US public debt from $24.97 trillion in April 2020 to $28.174 trillion in April 2021. As a result, the dollar’s strength against major currencies has fallen by more than 12.5% since March 2020. Meanwhile, bitcoin’s performance over the same period is 855%. This chart shows the performance of a $1,000 investment in #Bitcoin and traditional investments like #shares, #gold or #dollars. Despite its high volatility, bitcoin has done much better than all these stocks over the past 10 years pic.twitter.com/TIae6U7PTo – Vince Prince (@VincePrince244) 2. June 2021 The drop in the bitcoin market on Thursday night confirmed the short-term negative correlation with the US dollar on short time scales. On the weekly chart, however, the two assets continue to move in opposite directions from each other, reminding us that Musk’s $1.3 billion in a $690 billion market is irrelevant in light of much more pressing macro issues, including inflation. The negative correlation between bitcoin and the US dollar index has existed since March 2020. Source: TradingView Forget Elon, here’s why Bitcoin traders should be watching the US Dollar Index instead

Elon Musk is in phase

Tesla continues to struggle to generate profits from sales of its electric vehicles, according to the company’s first quarter earnings reports. Of the reported $594 million, only less than $100 million came from actual transactions, while the rest came from the sale of profitable BTC investments (~$272 million) and regulatory loans. In short, Musk’s game with bitcoin is like that of a small trader. The billionaire entrepreneur has previously looked to cryptocurrencies as a means of making up for his company’s poor performance. This became clear after he abruptly decided to accept BTC as payment, followed by tweets that he might force Tesla to get rid of all its bitcoin assets, leading to a meme about his breakup – which incidentally happened on the same day that global media reported a 50% drop in Tesla car sales in China due to quality issues. Tesla’s Chinese orders halved in May – info https://t.co/byiMlnKqWk pic.twitter.com/uSYoh9n5ei – Reuters (@Reuters) June 3, 2021 But Musk’s influence on the bitcoin market is diminishing with each of his anti-cryptocurrency tweets, proving that the scale of the cryptocurrency is shrinking. For example, in mid-May, his Twitter feud with crypto-currency influencers caused the price of BTC/USD to drop from $58,000 to $30,000, a drop of about 42%. Despite this, the pair made up almost 30% of those losses. By comparison, Elon Musk’s latest candle only subtracted $3,500 from bitcoin’s valuation, an intraday loss of about 9%. By attributing this decline to Elon, you are denying that the breakout lacked volume and failed to break through resistance at 39.5k. When he tweeted, the price had already dropped after maybe 3 breakout attempts. – F.F. Möhäanen (@myohaanen) June 4, 2021 As a result, bitcoin continues to trade higher over the long term, driven by the same anti-dollar fundamentals that have attracted companies like Tesla all along. Further bullish signals for cryptocurrencies are expected from President Joe Biden’s $6 trillion government spending package, which will put additional pressure on the U.S. dollar. Biden’s massive debt plan and monetization by the Fed could do real damage to the reserve status of the US dollar.https://t.co/S7dFgOvYFY – Daniel Lacalle (@dlacalle_IA) May 29, 2021 For now, the cryptocurrency remains in technical limbo, awaiting a decisive move out of the current $32,000 to $40,000 range. Musk is old hat. Come on, Bitcoiners. This article contains no investment advice or recommendations. Any investment or business transaction involves risk, and readers should do their own research before making a decision. The views, thoughts and opinions expressed herein are those of the author and do not necessarily reflect or represent those of Cointelegraph.The dollar is a familiar topic in the cryptocurrency world. But what about the US Dollar Index? In the past few years, the US Dollar Index has become a more influential measure of the US Dollar than the actual USD itself. It is a widely used benchmark for all the dollar denominated assets. So why should you care? The US Dollar Index is a great indicator of how the US economy is doing, and during a period of economic uncertainty, it can give you a good idea of where the dollar is headed.. Read more about elon musk bitcoin and let us know what you think.

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