A decrease in the DXY caused the global financial markets to turn green early on Friday, providing much-needed relief for Bitcoin (BTC) and the cryptocurrency market. This development also threatens to end Wall Street’s three-week losing skid.
According to TradingView data, BTC had a 10.7% price increase during the early trading session on Friday after spending the majority of Thursday trading close to support at $19,200. Before bears were able to mount some resistance, BTC reached a high of $21,370.
Senior Kitco Market Analyst Jim Wyckoff said that “BC bulls have swiftly acquired momentum since they have at least temporarily neutralized a price decline on the daily bar chart” as a result of Bitcoin’s rise to a two-week high.
The bulls need to “display significant follow-through purchasing power in the next several days, which would signal a near-term market bottom being in place,” according to Wyckoff, as the market moves higher.
Because of the advances on the whole crypto market, the overall market cap, which stood at $1.036 trillion at the time of writing, was able to surpass $1 trillion once again.
The dollar falters
David Lifchitz, managing partner and chief investment officer of ExoAlpha, offers further insight into Friday’s unexpected surge in BTC. He made a clear reference to the DXY decline as the catalyst for today’s action.
In a communication with Kitco Crypto, Lifchitz stated that “US equity futures, European equities, and pretty much all risk assets surged on Friday morning as the dollar finally fell, plunging by the most in a month to the lowest level in September, after setting an all-time high just two days before.”
Before the price increase, Lifchitz cautioned that efforts by central banks around the world to “increase their interest rates in order to fight inflation were producing a lot of headwinds for risk assets in 2022, including Bitcoin,” especially the US Fed, “which is so far ahead of its peers in terms of tightening, that it has strengthened the USD, and therefore, weights on the Bitcoin price in USD.”
In line with Lifchitz’s observation that “with the BTC/USD pair, if USD goes up, BTC mechanically goes down and vice-versa,” Friday’s decline in the DXY inevitably resulted in gains in Bitcoin.
According to Lifchitz, the direction of interest rate rises by the Fed in the future will have a significant impact on the future of Bitcoin and the larger crypto industry.
“After the torrid USD run, it pulls back and BTC jumps… so imagine what it will be when the FED stops hiking or even eases rates… BTC back to the moon (or almost).”
Right now, all that can be done is wait and watch how the Fed responds. Lifchitz added that the central bank had just two days earlier “warned of the risk they perceive of relaxing monetary policy too early… and they are projected to hike rates by 75bps again at their next meeting on September 21st.”
Crypto traders are currently taking advantage of the abundant green after a challenging start to 2022 and are anticipating spring after a challenging crypto winter.
The market capitalization of all cryptocurrencies is currently $1.036 trillion, with a 38.8% dominance rate for Bitcoin.
This article was originally published on kitco.com