Popular crypto analyst Benjamin Cowen says Bitcoin (BTC) traders should pay close attention to the US dollar index (DXY).
In a new YouTube update, Cowen tells his 725,000 subscribers that bullishness for the DXY tends to be bad for Bitcoin.
According to data from MarketWatch, the dollar index has been on a relatively steady uptrend for the past year.
“Unfortunately, when the US dollar currency index is in an uptrend, Bitcoin tends to be in a downtrend, especially if that uptrend is very strong.
On the contrary, when DXY is in a downtrend, Bitcoin tends to go parabolic, and so I do think it’s worth looking at the US dollar currency index quite a bit because it does seem to dictate what Bitcoin does, as it does give us a reference point to whether we’re risk-on or risk-off.”
Because the DXY is in a strong uptrend, the overall market likely remains risk-off, according to Cowen.
The analyst notes Bitcoin investors should hope for the opposite.
“What we need to look for Bitcoin to actually get bullish, and not just have some of these fake-outs where it doesn’t really do anything, is to see the dollar have a reversal and come back down.
That’s what we really want to look for. Again, we had a reversal in 2017, and then we had one again in 2020, perhaps we’ll have another one in 2023, obviously, it’s too early to say that right now. But that’s ultimately what we’re looking for.”
Bitcoin is trading at $40,092.01 at time of writing.
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