Bitcoin Edges Close To $12,000 As Dollars Sinks
The U.S Dollar is close to losing its 12-year high streak. The bullish run by Bitcoin is putting the dollar at risk of falling to low levels experienced in 2008.
The dollar index is already at the bottom of a 12-year trendline. Analysts and experts are calling it one of the most important moments of the global reserve currency in the last 12 years. Many believe the continuous drop of the currency will be accompanied by an increase in the price of Bitcoin.
Since April, the U.S dollar has dropped against other global reserve currencies. Most investors are of the opinion that the drop in the dollar valuation will affect the price of Bitcoin.
“This is arguably the most pivotal moment we have seen for the United States Dollar since it bottomed in 2008. This channel has been intact for over 10 years. If it breaks down, hide yo’ kids and buy a metric ton of Bitcoin,” said Scott Melker, a renowned crypto trader.
How Does The U.S Dollar Affect Bitcoin?
In the past few weeks, the rise of bitcoin has been followed by a decline in the dollar. As one analyst points out, the declining dollar is good news for the Bitcoin rally.
The Bitcoin price is subject to the value of the dollar because of traders price Bitcoin against the dollar. When there is a drop in the dollar, the asset that Bitcoin trades against reduces in value. Thus when the dollar falls, there is a strong chance that BTC rises.
“If the dollar continues to depreciate, there is a high probability that Bitcoin will continue to rise,” an analyst mentioned.
The fact that the U.S economy is in decline is affecting the dollar. The coronavirus has had an adverse effect on the U.S economy, thus leading to a noticeable drop in the dollar in comparison to other global reserve currencies.
“The thing that’s changed in the last few days is that it’s not just gold which has gone up against the dollar, but almost everything,” explained Société Générale’s global macro strategist Kit. “That’s partly driven by a sense that the U.S. is having a harder time controlling the virus than others, which will see the U.S. economy underperform.”
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