The dollar has been on a steady decline since the pandemic first struck. Weakness in the global reserve currency has allowed gold, Bitcoin, and other assets to shine.
However, either a major rebound is beginning, or the dollar is about to experience another massive drop. The asset is clearly at a ‘do or die’ moment, but how will further downside in the dollar impact the leading cryptocurrency?
The Dollar’s Ongoing Demise and Fall From Global Reserve Grace
The dollar is the most dominant force in the finance world, but when you’re on top, everyone wants to see you fall. Recently, the dollar has been declining, allowing competing assets and currencies like Bitcoin, gold, and the yuan to gain ground.
The weight of its global reserve currency status has caused it to crack under pressure. Money supply being printed to prevent further economic slowdown has only further harmed the dollar’s reign.
Further amplifying the issue, as more money supply has been printed, it hasn’t all went into stimulating economic recovery. As ROI has clearly demonstrated, some of the stimulus money has gone directly into crypto assets like Bitcoin and Ethereum, or precious metals silver and gold.
Related Reading | ETF Manager CEO: Bitcoin Has Cemented Itself As A Dollar Alternative
The thing these assets rising while the dollar drops have in common is a limited supply. Dollars are being made out of thin air. Meanwhile, the limited supply in these assets prompts their valuations in USD to rise due to inflation.
It has also allowed other competing currencies to make a run for the top currency, such as China’s yuan.
But as dollar sentiment dropped to extremes, a reversal appears to be brewing that could be harmful to the same assets that benefitted from its drop.
Sentiment has fallen to the point where reversals have taken place before, there’s a TD 9 buy setup on daily timeframes, and several other bullish signals in the dollar.
But comparing the DXY Dollar Currency Index to historical Bitcoin charts perhaps provides another take on what to expect from USD.
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