The crypto market in particular or the financial market in general is under the influence of countless different variables that cannot be predicted. However, there is one variable that has a great influence on crypto that anyone who wants to become a good trader must know and understand how it affects? Let's find out that variable with Holdstation and Banana Research Lab through this analysis!
Impact of USD on crypto assets
For those who are new to crypto investing or even experienced traders, everyone must remember one thing: There is only one factor that determines more than 50% of the price of Crypto, BTC and Altcoins ⇒ That is the price of USD
But how do we measure the value of the greenback? ⇒ It is through the dollar strength index (DXY - Dollar index is displayed on the XY chart)
At key periods (making market tops and bottoms), BTCUSDT and DXY will often divergence from each other. To put it simply, in periods of market volatility, the price of BTC and USD will run against each other. BTC increases, the USD decreases and vice versa.
When the greenback's strength index (DXY) increases, so does the price of the dollar, and vice versa.
Thereby, we can see that it is certain that the price of BTC depends on USDT.
So is this correlation really big enough to make all investors pay attention?
Quantification of correlation
The following two charts will clearly show investors and traders the dependence and correlation of BTC and USD prices.
It can be seen that BTC and DXY tend to be very opposite. 50% of the price of the Crypto market is influenced by the USD. Investors can see that after the historical rate increases, after the rate increases, the long-term trend of the DXY (the index representing the USD) then continues to make lower lows.
A big picture shows you that the increase and decrease in interest rates will have both positive and negative effects compared to fluctuations in the market. In the current time of 2022, after having experienced 5 increases in interest rates, the overall crypto market is trending down against the dollar. When the price of 1 USD at the time of writing has almost touched the mark of 25,000 VND / 1 USD.
Main trend and probability
Main trend and probability
Based on the Fed stopping the bailout packages to pump into the economy, the market. The time of the covid19 pandemic has caused the US government to continuously print money to launch relief packages for the community. The recent interest rate hikes are a form of government withdrawing money to keep inflation down to 2%.
Crypto will also saturate at a certain level ending the last bullish wave in this cycle. History has shown us - each crypto cycle lasts longer than the previous one. So to answer the question whether the market is over? - Then Holdstation and BRL would like to make a new prediction about the market that we still have 1 FINAL UP wave of this cycle. However, the time for it to happen is definitely not now. But that's not why we're sad, but we should be happy because investors or newbies will still have time to learn and gain experience for this final bullish wave.
In short, the dollar strength index (DXY) is an extremely important indicator that investors must keep a close eye on. When this indicator has been proven to influence more than 50% of the price of BTC will go. Accumulating knowledge to wait for the last wave of the crypto market is never enough. Together with Holdstation and Banana Research Lab, always closely monitor the market situation to have effective strategies to take the first blow.
Banana Research Labs's Linktree: https://linktr.ee/brlvn