Cryptocurrencies

All Signals Are Green For Bitcoin and BTC / USD! – Cryptocurrencies

BTC / USD continues to benefit from dollar weakness as expectations of the US presidential election weigh on the greenback. This ambient sentiment benefits safe havens and in particular Bitcoin (BTC) which has been at its highest since September 02. Until the big day …

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Dollar Index (DXY)

Bitcoin displays a negative correlation with DXY since May. You can easily see it in the following graph.

dxy vs gold vs bitcoin
This chart shows the evolution of the values ​​of gold, bitcoin and the dollar since the March crash (Covid).
Orange line: gold
Blue line: Dollar Index (DXY)
Black line: Bitcoin
Source: Cointelegraph

We can see on this annual graph that It was not so much the fall of the US stock market that weighed down Bitcoin and gold, but rather the sharp rise in the dollar.

Indeed, the United States remain the first world power capable ofimpose its currency on the rest of the world. Since Bretton Wood, the value of currencies is based on the dollar “standard” which still represents 60% of the foreign exchange reserves of all central banks. The hegemony of the greenback makes it the ultimate safe haven when uncertainty takes hold of the stock market. And this, even if it is Wall Street that is crumbling!

In 2009, following the bankruptcy of Lheman brothers, investors rushed for the dollar! The same scenario has been repeating for 60 years … But nothing lasts forever. The world changes. Maturity of the chinese power, exhaustion of US oil reserves, embargoes, extraterritoriality of US / dollar law, huge debt American. So many new parameters that could soon change the situation compared to the last decades …

Either way, the DXY has been on the pullback again in recent days, allowing Bitcoin to turn towards the resistance of the $ 12,000. This threshold will certainly be swept away if the DXY marks a low below the 92 bar.

DXY
DXY source: cnbc
The US Dollar Index (USDX, DXY, DX) is an index (or measure) of the value of the US dollar against a basket of foreign currencies.
Euro, weighting 57.6%, Japanese Yen 13.6%, Pound sterling 11.9%, Canadian dollar 9.1%, Swedish krona 4.2%, Swiss franc 3.6 %%

Keep in mind that BTC / USD lost 50% of its value when the DXY has gone from 95 to 103 during the March crash … and that BTC has since gained about 200%. Gold has earned him approximately 30 % (but hadn’t collapsed 50% before …).

President of the United States of America

Biden win would be bearish for US stock market because the democratic program plans to further tax multinationals. That being said, a decline in Wall Street does not have to mean a decline in the dollar. In this case, it would be a simple tax adjustment and not a global financial crisis that would encourage investors to take refuge in the dollar.

On the contrary, we should observe capital flight abroad and therefore a additional downward pressure on the dollar. Which would therefore bode well for Bitcoin. Goldman Sachs moreover expects the DXY drops to lowest since 2018 if Biden wins. That year, the DXY was then below the 89 mark. Do your accounts …

Currently, bearish bets on the dollar via the futures market are at their highest for two years… Which reflects the fact that Biden leads in the polls, so it’s worth…

 Dollar-backed futures
Net positions in the Dollar-backed Futures market. At its lowest for two years.
Source: Reuters

FED Put

Whatever happens, the FED remains ready for deballasting if the markets ever falter. The printing press is running at full speed. It’s very simple, 27% of the dollar M1 money supply was created for the only year 2020 …

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On the contrary, let us remember, the money supply of Bitcoin only increased by 2% in 2020. And it will only increase by 1.75% in 2021… What will that of the Dollar do?…

Not to mention that the FED has promised that the rates will not go up before 2023. Which is extremely bullish for gold and Bitcoin which have a powerful inverse correlation with real rates.

Correlation of gold with real rates
Gold’s correlation with the interest rate on US 10-year debt is very strong with gold. The R2 is 0.95.
Real rate of the 10-year US rate = 10-year borrowing rate – inflation

The FED is ready to give a layer of ” Quantitative Easing “As she openly asks for more” fiscal stimulus “. Understand thereby more “budget deficit”, which already exceeds the $ 3 trillion for 2020. Never seen.

If Democrats and Republicans reach an agreement, the budget deficit could worsen by 2000 to 3000 billion more over the next few months. It is even rumored that a second check for $ 1,200 will be sent to every American, in the form of ” Digital Dollar »… What to see life in pink for the Bitcoin.

Hash Rate and others

On the BTC side of the BTC / USD pair, note that the Hash rate of cryptocurrency continues to break records. There has never been so much computing power dedicated to securing your blockchain.

According to Bitinfocharts, the Hash Rate recently surpassed 155 exahashs per second (EH / s). We were at 130 EH / s when BTC / USD hit $ 20,000, in December 2017. Hash rate extrapolation suggests BTC / USD should already be above $ 30,000.

In short, the miners are optimistic lately …

Another reason to be bullish: the last Kraken Intelligence report (September) reporting that October is historically better than September for Bitcoin, with an average increase of 11%.

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Kraken analysts also note that the number of addresses containing between 1,000 and 10,000 BTC (“smart money”) continues to grow strongly and that this trend has lasted for over 7 months.

The lights therefore remain fluorescent green for BTC.

  • BTC / USD weekly chart (one candle = one week)
btc / usd
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