BITCOIN + USD + Money Supply. Why the price is under pressure.

Тема в разделе "English", создана пользователем Trading Ideas, 27 сен 2020.

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    BITCOIN + USD + Money Supply. Why the price is under pressure.
    Bitcoin / U.S. dollar BITSTAMP:BTCUSD
    TradingShot
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    This month Bitcoin has been anything but bullish and it is under pressure since the mid-August High. There might be various reasons for this and traders are trying to find the most valid.

    In this idea I quickly look at the correlation of BTC with the DXY (U.S. Dollar) and M1 (Money Supply).

    Recently, we are seeing a strong comeback by the Dollar after 4 months of heavy sell pressure. At the same time, the Money Supply is rising again after being pressured since August. During this period, BTC also remains under selling pressure, being unable (yet) to break above its Lower Highs trend-line.

    I wanted to find out in the COVID era, how BTC behaves when those 2 parameters are in sync (USD rising along with M1 ). As you see on the chart, when DXY and M1 are both trading upwards (4 other times since February), Bitcoin is always highly volatile and under pressure (you can argue that the period March 27 - April 06 was bullish but BTC initially dropped -15% and then gained +25%).

    So what does all this information tell us? That as long as the Dollar and Money Supply continue to rise, Bitcoin will most likely stay low and volatile and won't regain August's Highs. We need to see the USD decline again while M1 stays bullish , in order for Bitcoin to get a sustainable boost.

    Do you find this correlation correct? Feel free to share your work and let me know in the comments section!


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