Bitcoin recently surpassed the $35k mark, reaching a new high for the year. This increase comes after breaking through resistance at the $32k level. While this is good news for Bitcoin investors, there is cause for concern. Bitcoin’s recent rally has diverged from the US dollar, which has strengthened against other fiat currencies.
Bitcoin and the US dollar have been moving in different directions since the first quarter of 2023. The dollar has been gaining strength, while other currencies, such as the Euro and Australian dollar, have weakened. For example, the EUR/USD exchange rate reached a peak of 1.12 in the first quarter but has since dropped to around 1.06. Similarly, the AUD/USD exchange rate has erased most of its gains from October 2022.
This divergence between Bitcoin and the US dollar is significant because Bitcoin is often included in institutional portfolios, meaning it does react to macroeconomic trends. While some may argue that Bitcoin’s lack of correlation with macro risks and positioning is normal, there is reason to believe otherwise. If the US dollar continues to strengthen, it is likely that Bitcoin’s rally will be reversed. Only if the dollar weakens would it make sense to celebrate a Bitcoin rally.
In light of this situation, caution is advised for Bitcoin investors. While the recent rally is exciting, it is important to consider the potential impact of the strong US dollar. If the dollar’s strength persists, it could reverse Bitcoin’s gains in the near future.
Overall, Bitcoin’s recent surge above $35k is a positive development for investors. However, the divergence from the US dollar raises concerns about the sustainability of this rally. It will be important to monitor the strength of the dollar and its potential impact on Bitcoin’s performance moving forward..
#Bitcoin #breaks #horizontal #resistance #32k #area #rally #extended #35k
Bitcoin and the US dollar have been moving in different directions since the first quarter of 2023. The dollar has been gaining strength, while other currencies, such as the Euro and Australian dollar, have weakened. For example, the EUR/USD exchange rate reached a peak of 1.12 in the first quarter but has since dropped to around 1.06. Similarly, the AUD/USD exchange rate has erased most of its gains from October 2022.
This divergence between Bitcoin and the US dollar is significant because Bitcoin is often included in institutional portfolios, meaning it does react to macroeconomic trends. While some may argue that Bitcoin’s lack of correlation with macro risks and positioning is normal, there is reason to believe otherwise. If the US dollar continues to strengthen, it is likely that Bitcoin’s rally will be reversed. Only if the dollar weakens would it make sense to celebrate a Bitcoin rally.
In light of this situation, caution is advised for Bitcoin investors. While the recent rally is exciting, it is important to consider the potential impact of the strong US dollar. If the dollar’s strength persists, it could reverse Bitcoin’s gains in the near future.
Overall, Bitcoin’s recent surge above $35k is a positive development for investors. However, the divergence from the US dollar raises concerns about the sustainability of this rally. It will be important to monitor the strength of the dollar and its potential impact on Bitcoin’s performance moving forward..
#Bitcoin #breaks #horizontal #resistance #32k #area #rally #extended #35k