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US Dollar Index Hits 6-Month High: Should We Worry About Bitcoin?

  • There seems to be a contrasting performance trend between the reserve currency, the U.S. Dollar (USD), and the first digital currency, Bitcoin (BTC).
  • Bitcoin can’t boast of a sustainable growth trajectory currently drawn by the U.S. Dollar because its performance over the last 7 days has been volatile, reaching a peak with a 7.99% loss at the time of writing.
  • With the U.S. Dollar gaining more strength, there’s a likelihood that more conservative investors might turn to dollar-based investment instruments. Outflows from Bitcoin, attributed to waning interest, are being observed as a result.

The U.S. Dollar Index has sustained a positive trend for 8 weeks; the bullish outlook for the Dollar continues, but this might not be good news for Bitcoin!

U.S. Dollar Index Keeps Rising

usdollar-usd

There seems to be a contrasting performance trend between the reserve currency, the U.S. Dollar (USD), and the first digital currency, Bitcoin (BTC). In a period where the USD is progressing towards its eighth positive week, Bitcoin is showing a comparative downward trend based on current on-chain data.

According to a Bloomberg report, the current positive trend in the U.S. Dollar is the most pronounced growth period since 2005. The bullish growth for this currency is fueled by significant improvements in the service sector, which has outperformed the goods sector for at least six months and has seen at least four times the performance improvement in the past 10 years.

This growth isn’t particularly good news for Bitcoin, which currently trades at a price of $25,770. In reality, Bitcoin can’t boast of a sustainable growth trajectory currently drawn by the U.S. Dollar because its performance over the last 7 days has been volatile, reaching a peak with a 7.99% loss at the time of writing.

With the U.S. Dollar gaining more strength, there’s a likelihood that more conservative investors might turn to dollar-based investment instruments. Outflows from Bitcoin, attributed to waning interest, are being observed, which is demonstrated with metrics like transaction volume and a Month-To-Date (MTD) decline.

Potential for a Change in Momentum

In the financial ecosystem, there exists a notable dynamism that often cuts short the swiftness of temporary asset growth. This trend appears to be positioned in a way that could alleviate any concerns regarding the current differing relationship between BTC and USD.

Despite the U.S. Dollar seeing some of its best days in almost a decade, the outlook for Bitcoin could change positively, especially considering some of the positive growth trends. One of these growth trends is the possibility of approval for a spot Bitcoin Exchange Traded Fund (ETF) product by the Securities and Exchange Commission (SEC). If the general consensus among industry experts regarding a potential approval holds true, we can anticipate capital to unilaterally flow from traditional finance into Bitcoin, which would generally strengthen the price outlook.

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Celal Mutlu
Celal Mutluhttps://coinotag.com/
Celal Mutlu is a young Satoshi reflection at the age of 21. His favorite characters are CZ and Vitalik, and he has a great sense of humor. Celal is a keen follower of developments in the world of cryptocurrency and keeps up with the latest news and trends.
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