The co-founders of the crypto analytics firm Glassnode believe that the US Dollar Index (DXY) will soon dip and spark a massive Bitcoin (BTC) bull run.
Glassnode co-founders Jan Happel and Yann Allemann, who share the Negentropic handle on the social media platform X, say the DXY appears to have peaked.
The DXY is a measure of the value of the US dollar against a basket of six major currencies. Traders keep a close watch on the DXY because a weaker index suggests that investors are favoring risk assets like stocks and crypto over the dollar.
“DXY reaches its peak, signals a possible end to Bitcoin consolidation.
Fireworks in BTC and crypto are expected to begin for real below 100 on DXY. For now, we seem to have top in in DXY as expected – and consolidation in BTC since April has come to an end.
A completely new environment for BTC is about to unfold. New highs coming.”
Looking at their chart, the traders seem to think that the DXY is forming a three-wave pattern labeled as the A-B-C wave of the Elliott Wave theory.
They predict that the DXY will dip below 100 before the end of the year and complete the C wave correction at the 89.34 level during the first half of next year.
The trader’s chart also predicts that as the DXY declines, the iShares Russell 2000 ETF (exchange-traded fund), a group of small-cap stocks, will start to soar.
The traders previously noted how the DXY strength was growing and putting downward pressure on Bitcoin.
“The dollar is making a comeback. The Dollar Strength Index hit its highest point in almost a year. This contrary to the widely-held bearish dollar view, represents a strong shift, now entering a phase of potential consolidation.
DXY needs to cool off and retest previous resistance as potential support for BTC’s recovery. Yet, greater market liquidity tends to benefit BTC in the long term, as investors seek alternative assets to hedge against sluggish economic growth.”
The traders also referenced macro expert Henrik Zeberg’s prediction that DXY’s peak would be around the 106 level before a correction. The DXY is at 106.07 at time of writing.
“The coming reversal in DXY which Henrik Zeberg forecasts may well be the driver for the coming rally in BTC. Correction in Bitcoin since April 2023 seems to be coming to an end.”
Bitcoin is trading for $26,845 at time of writing, down 1.1% in the last 24 hours.
Generated Image: Midjourney
Credit: Source link
