Bitcoin has fought with lower minimums in recent weeks, leaving many investors who ask themselves if the activity is on the verge of a large bear cycle. However, a rare data point linked to the resistance index of the US dollar (Dxy) suggests that a significant change in market dynamics can be imminent. This sign of Bitcoin purchase, which appeared only three times in the history of BTC, could indicate a bullish reversal despite the current bearish feeling.
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Bitcoin: this had ever happened only 3x before
BTC VS Dxy Reverse relationship
The action of Bitcoin’s prices has long been inversely related to the US dollar (Dxy) dollar index. Historically, when the Dxy strengthens, BTC tends to fight, while a Dxy in decline often creates macroeconomic conditions favorable for the appreciation of Bitcoin’s prices.
Despite this historically bullish influence, the price of Bitcoin has continued to retire, recently descending from over $ 100,000 less than $ 80,000. However, the past occurrences of this rare dxy retracement suggest that a delayed but significant BTC rebound could still be at stake.
Bitcoin buys historical events signals
Currently, the Dxy was in strong decline, a decrease of over 3.4% within one week, a variation rate that has been observed only three times in the entire commercial history of Bitcoin.
To understand the potential impact of this Dxy signal, we examine the three previous cases when this strong decline of the US dollar resistance index occurred:
- 2015 Post-Bear Market Bottom
The first occurrence was after the price of BTC was the fund in 2015. After a period of lateral consolidation, the price of BTC has undergone a significant increase in rise, gaining over 200% in months.
The second instance occurred at the beginning of 2020, following the strong collapse of the market triggered by the Covid-19 pandemic. Similar to the case of 2015, BTC initially experienced an action at a rippled price before a rapid tendency to rise emerged, culminating in a multimeter event.
- 2022 Recovery of the bears market
The most recent request took place at the end of the 2022 bears market. After an initial period of prices, BTC followed prolonged recovery, climbing at substantially higher prices and kicking off the current cycle of bulls in the following months.
In any case, the strong decline of the Dxy was followed by a consolidation phase before BTC boarded a significant bullish race. By superimposing the action of the prices of these three cases on our current price action, we have an idea of how things could go in the near future.
Share markets Correlation
Interestingly, this model is not limited to Bitcoin. A similar relationship can be observed in traditional markets, particularly in Nasdaq and in the’s & p 500. When the Dxy portrays in a brusque way, the equity markets have historically overperformed their basic yields.
The average performance of 30 days ever for Nasdaq following such a Dxy decline is 4.29%, well above the standard performance of 30 days of 1.91%. By extending the window to 60 days, the average return of the Nasdaq increases almost 7%, almost doubled the typical performance by 3.88%. This correlation suggests that Bitcoin performance following a strong dxy retracement align with wider historical market trends, strengthening the topic for a delayed but inevitable positive response.
Conclusion
The current decline of the resistance index of the US dollar represents a sign of bitcoin and historically bullish Bitcoin. Although the immediate action of the price of BTC remains weak, the historical precedents suggest that a period of consolidation will probably be followed by a significant rally. Especially if reinforced by observing the same response in indices such as the Nasdaq and S&P 500, the largest macroeconomic environment is setting favorably for BTC.
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Disclaimer: This article is only for information purposes and should not be considered financial advice. Always do your searches before making any investment decision.