In recent time an inverse relationship has emerged with BTC and DXY
Previously there were spikes that had inverse relationships between DXY and BTC (2018 and 2020) but since November last year there has been a solid inverse relationship that has been sustained the inverse pattern quite consistently.
** Disclaimer** I'm a novice trader working to put my thoughts out there to see how they stack up against the market - please feel free to share/comment on my studies - please don't use this chart as financial advice
Normally when I see blood in the water any morning I look at DXY movement and comfortably I can see that if DXY has moved several dollars up, BTC general takes a nose dive, and with that all other coins that are directly influenced by BTC (which is all of them) follow suite. It's unclear what drove the link between these two financial mechanisms but for the time being I monitor DXY against BTC to help manage my expectations and activity of crypto. I suspect people bail on BTC when DXY is up to flip into forex positions that may seem more lucrative. I may try to see if maybe USDC or USDT gain value from DXY in the future also.
That being said it's hard to pinpoint WHY specifically these two are now directly inversely linked in a sustained manner. It could also be just be strawman correlation while the fiat and crypto market consolidate the global financial situation, however its worth monitoring.
I will track these inverse relationship over time to see if at any point there is a decoupling or a strengthening of influence between these two indicators.
Previously there were spikes that had inverse relationships between DXY and BTC (2018 and 2020) but since November last year there has been a solid inverse relationship that has been sustained the inverse pattern quite consistently.
** Disclaimer** I'm a novice trader working to put my thoughts out there to see how they stack up against the market - please feel free to share/comment on my studies - please don't use this chart as financial advice
Normally when I see blood in the water any morning I look at DXY movement and comfortably I can see that if DXY has moved several dollars up, BTC general takes a nose dive, and with that all other coins that are directly influenced by BTC (which is all of them) follow suite. It's unclear what drove the link between these two financial mechanisms but for the time being I monitor DXY against BTC to help manage my expectations and activity of crypto. I suspect people bail on BTC when DXY is up to flip into forex positions that may seem more lucrative. I may try to see if maybe USDC or USDT gain value from DXY in the future also.
That being said it's hard to pinpoint WHY specifically these two are now directly inversely linked in a sustained manner. It could also be just be strawman correlation while the fiat and crypto market consolidate the global financial situation, however its worth monitoring.
I will track these inverse relationship over time to see if at any point there is a decoupling or a strengthening of influence between these two indicators.
Comment:
some reading I've been doing on this interaction is a lot of people do not believe there is a clear relationship here so I will look to see how I can better correlate the two without showing false causation. Beyond that, some theories that I've been reading are associated to unsettled investors looking to find the best place for them money in the volatility