- A general assumption that an increase in the US Dollar impacts Bitcoin’s fall.
- The influencers and analysts have examined the inverse correlation.
- Huobi has temporarily halted futures trading for Chinese users.
According to the report, the analysts and influencers have been examining the demographics of the US Dollar and Bitcoin (BTC). There is a general assumption that the increase in value of the US dollar has a negative impact on Bitcoin.
For the past few months, analysts have been examining the issue regarding the inverse correlation.
So I guess we’re not all obsessed with $DXY anymore? Because it’s looking super bullish & had provided an almost perfect inverse correlation for over a year. Either way we’re about to find out if $BTC has matured to the point of being uncorrelated. 🇺🇸🏦🖨️ #Banks #Brrrr #Bitcoin pic.twitter.com/gequzmr6p2
— Alex Saunders 🇦🇺👨🔬 (@AlexSaundersAU) February 2, 2021
Many influencers predict that if the value of DXY falls then it would trigger the value of BTC to surge.
For the past few months, it is visible that the correlation has inverted between Bitcoin and the US Dollar index.
However, a surge in the value of the US Dollar results against the major global cryptocurrency. Moreover, Bitcoin price fell to 8% low on June 8, strengthening the inverse correlation hypothesis.
The demographic of BTC (orange) and DXY (blue) depicts correlation statistics. Since mid-March, the correlation indicator has been above 50%, indicating that DXY and BTC have generally followed similar trends.
Significantly, analysts prefer to use an extended timeframe of the past data to understand the nature of DXY and Bitcoin. In this timeframe, it is noticeable that both the markers have been relatively down since last May. Consequently, the DXY index surged while Bitcoin stuck to the same flat range in June. Many factors could have contributed to Bitcoin’s failure to maintain $40,000 support on June 16 and the subsequent price drop.
Furthermore, a meeting led by Liu He, Vice Premier of China, and all members of the all-powerful eight-person politburo on May 24 regarding the control of financial risks. Besides, Huobi has temporarily halted futures trading for Chinese users. The discussion includes the crackdown on Bitcoin Mining and trading activities.
As a result, US regulation, as well as the current Chinese crackdown on bitcoin mining and trading activities, appear to be critical to bitcoin’s recent poor performance. When those issues are no longer a threat, the gap created by DXY’s positive move may close.