The U.S. dollar has dropped to three-month lows, and as a result, Bitcoin (BTC) may experience a “parabolic curve”. This was suggested by Moustache, a well-known trader, in a tweet on July 11.
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DXY “most important chart” for Bitcoin this year
The inverse correlation between Bitcoin and the U.S. dollar index (DXY) has weakened in 2020, but traders are still discussing its movements.
Cointelegraph Markets Pro and TradingView data indicates that the DXY is close to testing the 100 support level, which was higher than 105 last year.
The bearish trend of the greenback, which would be confirmed if the 100 mark is broken, could be beneficial for Bitcoin, according to Moustache.
“Calm before the storm. Big Move is still loading,” he commented while sharing a chart of the DXY approaching the bottom of a Gaussian channel on weekly timeframes.
The DXY has also been affected by investors expecting a reversal in U.S. interest rate hikes, as inflation has decreased. The July 12 Consumer Price Index (CPI) was below forecasts, which has been beneficial for risk assets.
Mikybull Crypto forecast that the downward DXY trend would continue and Bitcoin/USD would reach $35,000.
Josh Olszewicz, another trader, called DXY the “single most important chart” for Bitcoin until 2024.
“DXY showing technical weakness coupled with a programmatic supply reduction of Bitcoin issuance may lead to an outsized price reaction for Bitcoin post-halving. Similar DXY moves from 100 to 90 after the previous two halvings provided a tailwind for significant multi-month bullish rallies,” he noted in a TradingView update.
The crypto world is keeping an eye on the DXY, as it may be the key to predicting the future of Bitcoin prices and web 3.0 features such as vet crypto, spell crypto, xlm crypto, and saitama crypto.
April levels return
William Clemente, co-founder of crypto analysis firm Reflexivity Research, provided a wider perspective by comparing the year-on-year change in DXY to the BTC/USD rate over the years.
Looking back, DXY traded at 100 in mid-April 2022, with Bitcoin at around $40,000 at the same time.
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