Is Bitcoin Dominance Following the Dollar Index?
The U.S. dollar has been sliding, with at least three major catalysts now weighing on the greenback:
1-Better economic numbers overseas, especially Chinese GDP last week
2-No QE boost from the European Central Bank last week, or the People’s Bank of China this week
3-A key stimulus deal by EU leaders this week
Meanwhile back in the U.S., politicians are pointing fingers and central bankers are considering more stimulus. This keeps DXY in focus into the next Fed meeting on July 29. Will the dollar break its March low of 94.65? This could be a big story to watch, especially now that buyers are piling into precious metals. Yesterday the
SLV
traded over 2 million options contracts, the most in nine years. It also had its biggest one-day gain (+9%) since late 2008.
This is classic risk-on behavior associated with a weak dollar.
Interestingly, Bitcoin Dominance seems to be following a similar trajectory as the Dollar Index. Both are seen as “safe havens” that do well in times of volatility but slide when risk appetite increases. Last week, correlation between the two charts was the highest in 4+ years.
Notice on the chart how BTC.D had slid under 64 and failed to rebound. This resembles other consolidation phases like January 2020, April 2017 and April-June 2016. In each case, Bitcoin was gaining, but higher-velocity altcoins rose even quicker.
This decline of Bitcoin dominance comes as decentralized finance keeps spreading (up more than 100% in the last month according to DeFi Pulse). Crypto enthusiasts may want to keep an eye on this relationship – especially if the trend of dollar weakness continues. It’s potentially bullish for altcoins like
ETHUSD
.
1-Better economic numbers overseas, especially Chinese GDP last week
2-No QE boost from the European Central Bank last week, or the People’s Bank of China this week
3-A key stimulus deal by EU leaders this week
Meanwhile back in the U.S., politicians are pointing fingers and central bankers are considering more stimulus. This keeps DXY in focus into the next Fed meeting on July 29. Will the dollar break its March low of 94.65? This could be a big story to watch, especially now that buyers are piling into precious metals. Yesterday the
SLV
traded over 2 million options contracts, the most in nine years. It also had its biggest one-day gain (+9%) since late 2008. This is classic risk-on behavior associated with a weak dollar.
Interestingly, Bitcoin Dominance seems to be following a similar trajectory as the Dollar Index. Both are seen as “safe havens” that do well in times of volatility but slide when risk appetite increases. Last week, correlation between the two charts was the highest in 4+ years.
Notice on the chart how BTC.D had slid under 64 and failed to rebound. This resembles other consolidation phases like January 2020, April 2017 and April-June 2016. In each case, Bitcoin was gaining, but higher-velocity altcoins rose even quicker.
This decline of Bitcoin dominance comes as decentralized finance keeps spreading (up more than 100% in the last month according to DeFi Pulse). Crypto enthusiasts may want to keep an eye on this relationship – especially if the trend of dollar weakness continues. It’s potentially bullish for altcoins like
ETHUSD
.