This week, Bitcoin fundamentals steam to new records. Thus, analysts warn that the United States dollar could return to its 2018 lows.
BTC (Bitcoin) started the week above $11,000. It is because fresh gains continue to hold.
Cointelegraph took some factors that can help decide whether this week is bearish or bullish for Bitcoin price action.
As Q4 continues, Bitcoin remains sensitive to macro phenomena. The United States election run-up can produce noticeable turbulence.
For one macro indicator, in particular, the outcome of a Democratic win looks bleak: the DXY (the United States dollar currency index). That is what analysts say.
A report on Oct. 12 (Bloomberg) Goldman Sachs warned that Joe Biden entering the White House might spook markets in advance. Thus, it will drive the United States dollar currency index down to its lows from 2018.
Historically, Bitcoin has seen a strong inverse correlation with DXY. Thus, fresh lows could be a boon for hodlers. In August, DXY dipping to just above 92 points came in tandem with $12,500 highs for BTC/USD. 2018 saw a dive to 89 – four percent lower than at present.
Moreover, the roll-out of a coronavirus vaccine will serve to hinder, rather than help dollar strength.
Bitcoin and Dollar
Goldman strategists wrote that the risks are skewed toward dollar weakness. Furthermore, they said that they see relatively low odd of the most dollar-positive outcome. It would be a significant vaccine delay combined with a win by the United States President Donald Trump.
Last week, Cointelegraph reported an opinion that, regardless of the winner in November, safe havens will win thanks to the election result. One analyst eyes a four-thousand dollars price target for gold.
Fresh restrictions come in across Europe, and it will produce more economic concerns regarding the coronavirus.
Various countries seek to enact repeated lockdown-style measures this week, with the ‘second wave’ seemingly firmly underway.
Last-minute Brexit negotiations add a headache for the United Kingdom during the turmoil. Moreover, days away is the deadline to reach some form of consensus on exiting the European Union.
Politicians still have failed to agree on a new stimulus package in the United States. The Americans eagerly anticipate it. It is because Treasury Secretary Steven Mnuchin confirmed the issuance of a second $1,200 stimulus check.
Stocks are up despite the gloom. Before the open on Monday, the S&P 500 futures gained 0.25%. China is leading the way. There weakening yuan, and investors are hopeful that the President’s upcoming speech will entice more foreign investment.