Bitcoin has struggled with lower low lower in recent weeks, which has left many investors who question whether the asset is on the verge of a larger bear cycle. However, a rare data point tied to the US Dollar Strength Index (DXY) suggests that a significant shift in market dynamics may be imminent. This Bitcoin purchase signal, which has only appeared three times in BTC’s history, could point to a bullish reversing despite the current bearish atmosphere.
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Bitcoin: This had only ever happened 3x before
BTC vs dxy Reverse relationship
Bitcoin’s price action has long been the reverse correlated with the US Dollar Strength Index (DXY). Historically, when DXY strengthens, BTC has a tendency to fight, while a falling DXY often creates favorable macroeconomic conditions for Bitcoin prize assessment.
Despite this historic Bullish influence, Bitcoin’s award has continued to retire, recently fell from over $ 100,000 to under $ 80,000. However, earlier occurrences of this rare DXY Retracement suggest that a delayed but meaningful BTC bound could still be in play.
Bitcoin buy signal historical instances
Currently, DXY has been in a sharp decline, a decrease of over 3.4% within a single week, a change rate that has only been observed three times in Bitcoin’s entire trade history.
To understand the potential effect of this DXY signal, let’s examine the three previous cases when this sharp decrease in the US dollar force index took place:
- 2015 Post-Bear Market Bottom
The first event was after BTC’s award was tied in 2015. After a period of sideways consolidation, BTC’s award experienced a significant increase upwards and won over 200% within months.
The second body took place in early 2020, after the sharp market collapse triggered by the Covid-19 pandemic. Like the 2015 case, BTC originally experienced chopped price action before a rapid upward trend arose, culminating with a rally of several months.
- 2022 Bear Market Recovery
The latest instance happened at the end of 2022 Bear Market. After an initial period of price stabilization, BTC followed with a sustained recovery, climbing at significantly higher prices and started the current bull cycle in the following months.
In both cases, the sharp decrease in DXY was followed by a consolidation phase before BTC began on a significant bullish race. By overlining the price action in these three cases on our current price action, we get an idea of how things could play out in the near future.
Equity markets Correlation
Interestingly, this pattern is not limited to Bitcoin. A similar relationship can be observed in traditional markets, especially in NASDAQ and S&P 500. When the DXY pulls strongly, the equity markets have historically better than their baseline returns.
The average average of the 30-day return for NASDAQ after a similar DXY repayment is 4.29%, well above the standard 30-day return of 1.91%. Expansion of the window to 60 days increases NASDAQ’s average return to almost 7%, which almost doubles the typical performance of 3.88%. This context suggests that Bitcoin’s performance after a sharp DXY Retracement is in line with historically wider market trends, strengthening the argument for a delayed but inevitable positive reaction.
Conclusion
The current decrease in the US dollar force index represents a rare and historic Bullish Bitcoin purchase signal. Although BTC’s immediate price action remains weak, historical precedent suggests that a period of consolidation is likely to be followed by a significant demonstration. Especially when it is reinforced by observing the same response in indices as NASDAQ and S&P 500, the wider macroeconomic environment creates positively for BTC.
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Disclaimer: This article is for information purposes only and should not be considered financial advice. Always do your own research before making any investment decisions.