Bitcoin (BTC), which has a $45,000 price tag, is expected to recover the dollar on October 1st as it falls from its one-year high. The tight inverse correlation between Bitcoin and the greenback over this month suggests that a weakening Dollar could push BTC prices higher in the future.
Hourly chart showing bitcoin-dollar correlation Source: TradingView.com
After a shock to the labor market, the dollar drops
The U.S. Dollar Index, which measures the strength of the greenback against six currencies including sterling and euro, reached $94.50 on Thursday, its highest level since Sept. 28, 2020. It retreated after news about rising U.S. unemployment claims, which was contrary to the predictions of a decline.
Thursday’s labor data showed that 362,000 jobless claims increased to 360,000 last week, compared with 351,000 one week prior and against economists’ prediction of 333,000. The result was that the number of reapplications remained at 2.8 million for five consecutive weeks.
This could mean that the Federal Reserve may delay cutting its $120 billion asset purchase program. It will likely do so from November to a later month. The news could also be good for the markets. This would keep interest rates low and the dollar’s revival temporary.
Daily price chart for DXY Source: TradingView.com
At the time of writing, the index was trading at 94.263.
Technical outlook: Bitcoin will rise, but dollar will fall
Technical analysis also indicated that the greenback was facing the possibility of a correction. TradingShot, an independent market analyst, spotted the dollar index within a Megaphone pattern. This is about to be topped out to pursue corrections in the coming sessions.
Megaphone technical setup on the US dollar index daily chart. Source: TradingShot and TradingView.com
TradingShot stated that DXY appears to be right at the top according to the 1D relative strength indicator (RSI).
“DXY is building a strong pullback to the Megaphone’s bottom.”
A recent selling spree in Bitcoin markets has created a Falling Wedge pattern. Falling Wedges are when the price trend lower within a channel that consists of two diverging, downward trendlines.
Traditional analysts view the Falling Wedge as a bullish indicator. This is because a break above the upper trendline of the Wedge moves the price higher as far as the distance between its trendlines.
BTC/USD daily chart with falling wedge setup Source: TradingView.com
The structure’s maximum height stands at approximately $10,000. The Bitcoin price could at most retest $50,000 if the Wedge breakout happens as planned.
weaker dollar means stronger Bitcoin
The report on the jobs market is weak could encourage investors to consider Bitcoin as an interim investment.
Related: Bitcoin’s dramatic fall from $50K to a stronger US dollar, Gold — Correlation
Vasja Zupan of Matrix Exchange told Cointelegraph that investors would continue to put their extra cash in crypto markets despite the weakness of the dollar and its devaluation against rising inflation. He stated:
“Bitcoin’s core proposition provides an integrated hedge against inflation. Therefore, persistently higher inflation in America can only propel it upwards. In the long-term, the dollar will be less valuable than Bitcoin.com. You should do your research before making any investment or trading decision.
Eileen Wilson –Technology and Energy
My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.