Bitcoin and EURUSD Correlation: A New Perspective
In recent discussions, analysts have been exploring new correlations involving Bitcoin (BTC) and its potential future price. One correlation that has caught the attention of many is the relationship between BTC and the EURUSD pair. Esteemed analyst Josh Olszewicz shed light on this correlation through a Twitter thread.
The BTC-EURUSD Correlation
Olszewicz begins by highlighting the well-known inverse correlation between Bitcoin and the US Dollar Index (DXY). He suggests that since DXY has a significant weighting of EURUSD, the BTC-EURUSD correlation should also be relatively high.
A Noteworthy Observation
Olszewicz makes an intriguing observation about the BTC-EURUSD correlation in the post-pandemic and post-halving period. He notes that the EURUSD pair has led BTC in both bullish and bearish directions, with a time lag ranging from one month to a full year.
This pattern, if it continues, could indicate bearish tendencies for Bitcoin. Olszewicz even suggests that BTC might drop towards $20k based on this correlation.
Technical Patterns
To support his projection, Olszewicz points out a bearish head and shoulders pattern observed in both BTC and EURUSD. This technical pattern indicates a potential trend reversal towards further downside movement.
A Glimmer of Hope
Despite the bearish outlook, Olszewicz provides some hope for Bitcoin bulls. He mentions that if you’re optimistic about BTC’s future, you either hope for a weakening/breaking of the correlation or an improvement in the EURUSD instead of further weakness.
Tin Foil Speculations
Olszewicz also discusses some speculative theories regarding the BTC-EURUSD correlation. He notes that the correlation seemed disrupted during Bitcoin’s second high in November 2022, suggesting that actions from major crypto players and the Anchor BTC reserve may have delayed the bearish trend.
Exercise Caution
While correlations can provide valuable insights, they should not be relied upon as guarantees of future market movements. It is important for investors to conduct their own research and exercise caution when making investment decisions.
Hot Take: The Future of BTC-EURUSD Correlation
The BTC-EURUSD correlation has become a topic of interest among crypto enthusiasts and analysts. While it suggests potential bearish tendencies for Bitcoin, there is still hope for bullish movements if the correlation weakens or if EURUSD strengthens. However, investors should approach these correlations with caution and consider multiple factors when analyzing the crypto market. Only time will tell how this correlation evolves and impacts Bitcoin’s future movements.
At press time, BTC stood at $26,180.
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