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The US Dollar Is Exploding… Here’s How It Will Affect the Cryptocurrency Market

The US Dollar Is Exploding… Here’s How It Will Affect the Cryptocurrency Market

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Answer The US Dollar Is Exploding… Here’s How It Will Affect the Cryptocurrency Market

Trader Peter Brandt shared a chart of the US dollar index showing that the world’s leading currency is breaking through resistance as the image in the tweet below shows:

Although no comments were made about the impact of the DXY index on the cryptocurrency market, traders are already anticipating significant pressures on Bitcoin and other cryptocurrencies on Monday.

Positive relationship:

Thanks to TradingView’s comparison tool, the inverse relationship between Bitcoin and the DXY indicator can be clearly seen.

Read:Visa acquires Ripple partner CurrencyCloud for $925 million

Wherever the US dollar shows strength in the market, Bitcoin tends to bounce off the tops and come back to test previous resistances.

The main reason behind this trend is simple, as investors choose less volatile assets whenever the US currency is strong and prefer slow and steady income from instruments like bonds rather than exposing themselves to risky assets like cryptocurrencies.

The Fed and Tightening Policy:

The recent rise in interest rates and the upcoming hikes expected until 2023 are making the US dollar feel comfortable compared to the rest of the world’s currencies.

We are likely to see continued strengthening of the currency in the future and a lack of inflows into risky assets and markets.

According to the net institutional flows last week, major investors are staying away from the cryptocurrency market, due to the rise of the US dollar in the market.

Investors took nearly $500 million away from the cryptocurrency industry after the sudden crash in the prices of big cryptocurrencies such as Bitcoin and Ethereum.

Fortunately, institutional investors often end up as a minority of purchasing power in the cryptocurrency market where large retail investors and funds that only operate in the cryptocurrency market can drive up the price of digital gold even without the help of traditional institutions.

Read:Tron (TRX) Project Founder Targets Ethereum and EOS Developers

However, given the current state of the dollar, it seems that the rise and rise of Bitcoin still faces many challenges.

Read also:

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