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Peter Brandt: U.S. Dollar Is Breaking Out, Here's How It Affects Bitcoin and Cryptocurrencies

Sun, 07/03/2022 - 16:02
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Arman Shirinyan
Veteran trader highlights important movement of financial market that may affect cryptocurrencies
Peter Brandt: U.S. Dollar Is Breaking Out, Here's How It Affects Bitcoin and Cryptocurrencies
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Veteran trader Peter Brandt has shared a U.S. Dollar index chart showing that the world's leading currency is breaking through the previously existing resistance. While not making any comments about DXY influencing the cryptocurrency market, traders already expect major pressure on Bitcoin and other cryptos on Monday.

Unpleasant correlation

Thanks to TradingView's comparison tool, we can clearly see a reverse correlation between Bitcoin and DXY. Wherever the U.S. Dollar is showing strength on the market, Bitcoin tends to retrace from local tops and resistance.

The main reason behind such a trend is simple: investors choose less volatile assets whenever the U.S. currency is strong and prefer making slow and steady income from tools like bonds rather than exposing themselves to risk assets like cryptocurrencies.

Fed's hawkishness taking shape

Thanks to the most recent rate hike and upcoming hikes until 2023, the U.S. Dollar is feeling comfortable compared to the rest of the world's currencies. We are most likely to see the continuous strengthening of the currency in the future and lack of inflows into risk assets and markets.

Bitcoin Will Be a Failure Even If It Hits $100,000, Says "Black Swan" Author

According to institutional netflows last week, large investors are getting away from the cryptocurrency market, also because of the U.S. Dollar's rally on the market. Investors took almost $500 million away from the cryptocurrency industry after the flash crash of assets like Bitcoin and Ethereum.

Luckily, institutional investors ‌often end up as a minority of the buying power on the cryptocurrency market as large retail investors and funds that operate solely on the crypto market can push the price of the digital gold up even without the help of traditional institutions.

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About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.