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BITCOIN AND THE US DOLLAR - WHAT THE DXY IS TRYING TO TELL YOU ABOUT BTC! - YouTube
Channel: tedtalksmacro
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Unless you've been living under a rock, you'll
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realize that the US dollar has rallied to
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its highest level since 2020 and that is
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boating pretty poorly for risk assets.
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But we're starting to see a
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pullback around the 104 level.
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This level over here from back in 2002 and
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2003 is quite a significant level in my opinion.
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And as you can say, the US dollar index is
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now testing into that region and we can see a
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bit of a pullback wants to go down onto the
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lower time frames on the dollar index and that is
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helping Bitcoin be supported at current levels around $30,000.
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And now it's a question whether the US dollar continues
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to fall back into the range and we can see
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some continued support in risk assets like equities, like crypto,
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leading into the June FOMC meeting, which will be the
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next key macro event for the markets to digest.
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So if we draw from below of July
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2002 across, I think that is the key
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pivot for the US dollar index moving forward.
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You can expect that level to act as resistance while
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we're below and then act as support while we're above.
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And if I Zoom into the lower time frames
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for the three day now, you can see that
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we're starting to push below that level.
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Bitcoin is moving higher, so US dollar strength means
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that Bitcoin moves lower, but US dollar weakness means
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that Bitcoin can move higher as well as the
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rest of the crypto market and equities as well.
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We see a total risk on shift when
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the US dollar moves lower, and the opposite
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is true for when it moves higher.
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So what does this all mean?
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I'm down on the four hour chart on the US dollar
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index now, and as long as we continue to see rallies
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into this roughly 104 level, we should see Bitcoin supported.
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So any moves like this from now on in
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should see further highs or further support for Bitcoin.
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But in the case that we start to see the
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US dollar gains some strength again and move towards the
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highs, we'll see Bitcoin fall back to the lows.
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Looking at the economic calendar to see
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if there's any catalysts for the US
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dollar index to move higher or lower.
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There's not a whole heap at the moment
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and we can see that this week.
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There's not much on the US front,
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but of course there's always the unscheduled
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events that can cause the most damage.
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So keep an eye out for anything
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that may not be scheduled next week.
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We have the FOMC meeting minutes so that's
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on May 26 and that will be very
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important for the markets to digest.
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You can shock the market into further aggressive
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hawkish pricing and that would send risk lower.
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That would send the US dollar higher, Bitcoin lower, and
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the other way, if there's a bit of dovishness and
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the Fed are kind of being more accommodative in those
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minutes, we can see the opposite effect where the market
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moves higher and risk appetite starts to grow.
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We also have preliminary GDP data.
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On the 26th and then into the 27th
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we have the core PCE inflation data.
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So that would be a key metric to
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watch as far as how inflation is evolving.
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And of course that is a key metric for
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the Fed to decide what they're going to do
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with their monetary policy in the coming months.
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So this week not so much on the economic
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front, but next week there will be a lot
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of noise I guess for the US dollar to
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digest, and therefore Bitcoin and equities will also have
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to digest that news help you visualize this correlation
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between the dollar index, US Equities and Bitcoin.
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Here is a chart.
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In the Orange we have Bitcoin.
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In the dark blue we have the dollar
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index, and in the light blue we have
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the Nasdaq, which is the US tech index.
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That includes Apple, that includes
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Netflix and companies like that.
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Now if we invert the US dollar index, you
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can see how highly correlated these three assets are.
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As the US dollar moves, US
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Equities move in the same direction.
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Well, in this case it's the inverse direction.
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Obviously the US dollar indexes inverse.
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Here they all move with the same
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flow being risk off or risk on.
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So there is a very strong correlation between all
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of these assets and how they move together.
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That is quite important when we're thinking about the
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US dollar hitting resistance on a macro level like
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we spoke about earlier at about 104 and how
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price action develops now around that level.
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Falling back into the range would mean that Bitcoin
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and equity start to see some support and a
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Lake higher, whereas the opposite is true.
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If the US dollar starts to be supported above
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that resistance and moves higher, we really could see
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Bitcoin and US equity start to dump lower.
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But the key for now is to monitor the
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data and monitor how those macro events that I
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pointed out play out over the coming weeks and
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into the June FLC meeting for that meeting.
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Currently, the market is pricing in a 50 basis point
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hike, which has been openly communicated by Jerome Powell, the
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head of the Federal Reserve, and that is being priced
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in with a 93% probability for the June meeting.
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So the outcome of that June meeting is basically priced
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in, and the market is even earning on the higher
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side of a 50 basis point hike, being a 75
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basis point hike with a 7% chance of happening.
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So that is one to watch as well.
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These probabilities will likely shift depending on
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how that data comes out and what
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the Feds say between now and then.
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So continually watching that and watching how that evolves will
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also impact how the US dollar is priced, how equities
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move off the back of that, and how Bitcoin moves
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in relation to equities so I would expect that there's
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a 50 basis point hike in June and that would
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be a sell the rumor for now and buy the
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news into the event like we've seen so far for
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the last six months leading into the Fed meetings.
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But of course those meeting minutes for next week
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are very critical and the contents of those meeting
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minutes will have a great deciding factor in how
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Bitcoin, how the US dollar and how equities move.
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Thanks for watching the video.
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I hope you like the content if you did leave
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a like on the video and subscribe to the channel
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I'll catch you on the next video Yeah.
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