{"id":26648,"date":"2023-12-15T09:30:10","date_gmt":"2023-12-15T09:30:10","guid":{"rendered":"https:\/\/nftandcrypto-news.com\/crypto\/us-dollar-hits-4-month-low-as-bitcoin-trader-predicts-10-drop-to-come\/"},"modified":"2023-12-15T09:30:14","modified_gmt":"2023-12-15T09:30:14","slug":"us-dollar-hits-4-month-low-as-bitcoin-trader-predicts-10-drop-to-come","status":"publish","type":"post","link":"https:\/\/nftandcrypto-news.com\/crypto\/us-dollar-hits-4-month-low-as-bitcoin-trader-predicts-10-drop-to-come\/","title":{"rendered":"US dollar hits 4-month low as Bitcoin trader predicts 10% drop to come"},"content":{"rendered":"
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Bitcoin (BTC) may enjoy a familiar tailwind in the coming weeks and even beyond if new macro forces continue to play out.<\/p>\n

In a post<\/a> on X (formerly Twitter) on Dec. 14, popular trader Crypto Ed, founder of trading group CryptoTA, eyed multi-month lows in U.S. dollar strength.<\/p>\n

Bitcoin trader targets sub-100 DXY dive<\/h2>\n

Bitcoin and dollar strength have in the past exhibited inverse correlation. While this has decreased in recent times, changes to U.S. macro policy are now broadly seen to boost Bitcoin but pressure the greenback going forward.<\/p>\n

As Cointelegraph reported, the week\u2019s macro data prints, combined with encouraging signals from the Federal Reserve, have analysts pointing the way to further crypto market upside next year.<\/p>\n

This is thanks to declining inflation potentially allowing for the Fed to \u201cpivot\u201d on interest rate hikes, increasing liquidity \u2014 to the benefit of risk assets.<\/p>\n

An asset not set to enjoy the aftermath of the switch is the dollar, which has declined precipitously this week as macro figures showed the impact of monetary tightening on inflation.<\/p>\n

The U.S. dollar index (DXY) is down more than 2% since the start of the week, currently below $102 \u2014 its lowest levels since mid-August.<\/p>\n

Commenting, Crypto Ed joined those who are optimistic on Bitcoin while predicting further downside pressure on DXY.<\/p>\n

\u201cLong Term Outlook for DXY what will help BTC to teleport to new ATH’s,\u201d he wrote, referring to new all-time highs for BTC\/USD.<\/p>\n

\u201cDXY to $92.\u201d<\/p><\/blockquote>\n

U.S. dollar index (DXY) 3-day chart. Source: Crypto Ed\/X<\/em><\/figcaption><\/figure>\n

An accompanying chart earmarked key levels to look for on DXY on 3-day timeframes.<\/p>\n

Fed balance sheet creeps higher<\/h2>\n

On the topic of liquidity, economist Lyn Alden nonetheless argued that conditions were not yet ideal in terms of supporting a broad risk-asset renaissance.<\/p>\n

Related:\u00a0Bitcoin bulls eye BTC price comeback as cash inflows echo late 2020<\/em><\/strong><\/p>\n

\u201cGlobal liquidity indicators started to stall a bit after their recent rise, and reverse repos haven’t drained in the first half of December, but today’s dovish Fed and drop in DXY potentially kickstarted a bit more liquidity,\u201d she told<\/a> X subscribers on Dec. 14.<\/p>\n

Days later, Alden nonetheless noted a \u201cpretty remarkable repricing\u201d by markets looking at how the Fed might lower rates in 2024.<\/p>\n

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DXY down again today so far, and crude oil and other commodities getting a bit of a corresponding bounce.<\/p>\n

The past 24 hours has seen a pretty remarkable repricing by the market of forward rate expectations. https:\/\/t.co\/HmrZ8oXEfe pic.twitter.com\/Wz9alU3hGe<\/a><\/p>\n

\u2014 Lyn Alden (@LynAldenContact) December 14, 2023<\/a><\/p><\/blockquote>\n

Data from the Fed itself shows its balance sheet increasing for the first time since August this month \u2014 by around $2 billion.<\/p>\n

Fed balance sheet chart (screenshot). Source: St. Louis Fed<\/em><\/figcaption><\/figure>\n

BTC\/USD meanwhile traded at $42,700 at the time of writing on Dec. 15, staying comparatively flat after brief volatility entered the day prior. The pair remains up 13% in December, per data from Cointelegraph Markets Pro and TradingView.<\/p>\n

BTC\/USD 1-hour chart. Source: TradingView<\/em><\/figcaption><\/figure>\n

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.\n<\/p>\n<\/div>\n