The dollar index (DXY) is inversely correlated to the price of Bitcoin. To make it easier to read I've inversed the DXY.
The direct correlation between the two assets has everything to do with risk. In a trading environment where investors are happy to take risks, they are willing to spend their dollars (downwards pressure) and buy risky assets (upward pressure). The inverse is true as well, as investors dislike risk, they will sell their risky assets and are happy to sit on their dollars.
As seen on the chart, the relationship between the two assets is remarkably similar. With the DXY gaining in strength recently (or selling off in the inverse chart), I'm anticipating more bearish pressure on riskier assets like BTC.
Bitcoin is holding up for now, but I'm assuming a stronger bearish trend in the near future.
Share your thoughts in the comments 🙏
The direct correlation between the two assets has everything to do with risk. In a trading environment where investors are happy to take risks, they are willing to spend their dollars (downwards pressure) and buy risky assets (upward pressure). The inverse is true as well, as investors dislike risk, they will sell their risky assets and are happy to sit on their dollars.
As seen on the chart, the relationship between the two assets is remarkably similar. With the DXY gaining in strength recently (or selling off in the inverse chart), I'm anticipating more bearish pressure on riskier assets like BTC.
Bitcoin is holding up for now, but I'm assuming a stronger bearish trend in the near future.
Share your thoughts in the comments 🙏
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