Bitcoin (BTC) could enjoy a familiar tailwind over the coming weeks and beyond if new macro forces continue to play out.
in post On December 14, Crypto Ed, a popular trader on
Bitcoin traders aim to dive below 100 DXY.
Bitcoin and dollar strength have shown an inverse correlation in the past. Although these numbers have declined recently, changes in U.S. macro policy are now widely seen as boosting Bitcoin but pressuring the dollar going forward.
As Cointelegraph reported, this week’s macro data combined with encouraging signals from the Federal Reserve has analysts on edge. It presents a path for the cryptocurrency market to rise further in 2024.
This is because lower inflation could cause the Federal Reserve to “pivot” to raising interest rates and increase liquidity to the benefit of risky assets.
One asset that will not enjoy the repercussions of the transition is the dollar, which has fallen sharply this week as macro figures show the impact of monetary tightening on inflation.
The U.S. Dollar Index (DXY) has fallen more than 2% since the start of the week and is now below $102, its lowest level since mid-August.
Commenting, Crypto Ed predicted further downward pressure on the DXY, joining those who are bullish on Bitcoin.
“The long-term outlook for DXY will help BTC teleport to a new ATH,” he wrote, referring to a new all-time high for BTC/USD.
“DXY for $92.”
The accompanying chart specifies the key levels to look for in the DXY over a three-day period.
Fed balance sheet gets higher
Nonetheless, economist Lyn Alden argued that the conditions that could support a broad-based risk asset renaissance are not yet ideal on the liquidity issue.
Related: Bitcoin Bulls Eyes BTC Price Returns As Late 2020 Cash Inflows Are Reflected
“Global liquidity indicators are starting to stagnate a bit after recent gains and reverse repos were not depleted in the first half of December, but today’s dovish Fed and DXY pullbacks have potentially triggered a bit more liquidity,” she said. said December 14th X subscribers.
A few days later, Alden nonetheless noted a “very surprising price correction” in the market about how the Federal Reserve will cut interest rates in 2024.
By today, the DXY had fallen again, while crude oil and other commodities had gained a corresponding slight bounce.
There has been quite a noticeable adjustment in futures interest rate expectations in the market over the last 24 hours. https://t.co/HmrZ8oXEfe pic.twitter.com/Wz9alU3hGe
— Lynn Alden (@LynAldenContact) December 14, 2023
The Fed’s own data showed its balance sheet expanded by about $2 billion in December for the first time since August.
Meanwhile, BTC/USD was trading at $42,700 at the time of writing on December 15, remaining relatively stable after a brief period of volatility the previous day. The pair remains up 13% in December, according to data from Cointelegraph Markets Pro and TradingView.
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.