The U.S. Dollar index (DXY) is about to enter a significant downtrend, according to cryptocurrency analyst EGRAG CRYPTO. In an analysis posted on Twitter, EGRAG projected that DXY would fall toward $93 after facing an upward rejection.
A confluence of events signaling a valid rejection around the $105 resistance level informed EGRAG’s DXY projection. An intersection of horizontal support and an upward trendline, supported by the 20 Monthly Moving Average (MMA), formed an impregnable region that halted DXY’s upward movement.
According to EGRAG, historical data provides evidence of a drop to 50 MMA to follow such a monthly close below 20 MMA.
Traditionally, the DXY is used to gauge the greenback’s exchange rate against major fiat currencies, including the British Pound and the Euro. It also maintains a historically negative correlation against Bitcoin, except during crypto-specific factors that influenced the markets via unexpected volatility.
Based on EGRAG’s projection, a falling DXY would imply Bitcoin’s price to surge to higher levels. In an earlier tweet, EGRAG indicated DXY has been in a downtrend since June 2022, with the potential to keep dropping until it achieves the $93 target. Based on its negative correlation with crypto, EGRAG predicts that the fall of DXY will ignite the markets, pushing crypto prices higher in the coming months.
From the analyst’s projection, the surge in crypto prices could last until Q3, 2023, when the markets could become “ugly,” with the expectation of a “Black Swan” in the last quarter of 2023.
The crypto market has been bullish since the beginning of 2023, respecting the negative correlation between crypto and DXY. Several analysts perceive Bitcoin’s pullback from the yearly high of $31,035 as a correction preparing the market for the next rally.
EGRAG’s analysis aligns with the prevailing sentiment, which suggests that Bitcoin and the crypto market would trend higher in the coming months ahead of a period of uncertainty that would usher in the next Bitcoin halving.
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Source: Cryptocurrency - investing.com
