• The Dollar Currency Index (DXY) recently suffered an ominous signal with a death cross appearing on the daily timeframe.
• Bitcoin, as an asset trading against USD, is especially susceptible to strength or weakness in the greenback.
• This death cross could potentially signal a trend change for USD, and in turn affect Bitcoin.
The Dollar Currency Index (DXY) recently experienced an ominous signal with a death cross appearing on the daily timeframe. A death cross is a technical analysis indicator that appears when the 50-day moving average crosses below the 200-day moving average. This is a potential sign of a trend change and has been cause for concern for many traders and investors.
The DXY is an index that tracks the performance of the US dollar relative to a weighted basket of other top currencies, such as the Euro, British Pound and Japanese Yen. Although the DXY does not include Bitcoin, the performance of BTCUSD appears to be especially sensitive to movements in the DXY. This means that any strength or weakness in the US dollar can potentially affect Bitcoin’s price.
Today’s death cross in the DXY is the first since its last golden cross in late July 2021. This could potentially signal a trend change for USD, and in turn affect Bitcoin. Bitcoin was created as the anti-fiat solution in the face of unprecedented quantitative easing and big bank bailouts, and so is naturally seen to be its arch enemy. As such, when the US dollar is strong, Bitcoin tends to be weak and vice versa.
It is yet to be seen what the effects of this death cross will be for the DXY and for Bitcoin. However, it is important for traders and investors to be aware of these possible signals and be prepared for any potential changes in the near future.