The Dollar and Bitcoin: A Surprising Rally
Despite the dollar’s recent surge, Bitcoin is experiencing a strong rally of its own. Typically, when the dollar strengthens, risk assets like Bitcoin would suffer. However, Bitcoin is defying this trend and continuing to climb.
James V. Stratton, a research and data analyst, noted that the last time the Dollar Index (DXY) reached 105 in March, Bitcoin was valued at $20,000. In the previous quarter of 2022, when DXY was also at 105, Bitcoin sat at $17,000. Now that DXY is once again at 105, Bitcoin has soared to $27,000.
This shows that with each revisit to 105 for DXY, Bitcoin grows stronger and has gained $10,000 against the dollar since the end of last year.
The Upcoming FOMC Meeting
The Federal Reserve’s next Federal Open Market Committee (FOMC) meeting is scheduled for September 20 and 21. During this meeting, Fed Chair Jerome Powell will convene with heads of all Federal Reserve banks to determine whether to raise or lower interest rates.
According to the CME Fedwatch tool, there is a 99% certainty that rates will remain unchanged. If this holds true and there is no interest rate hike, the dollar may lose momentum. However, if Powell delivers a particularly hawkish speech, it could sustain the dollar’s upward trajectory.
Bitcoin’s Appeal for Long-Term Investors
Despite the fluctuations in the dollar’s value due to inflation and central bank actions, Bitcoin remains an attractive investment option. Its limited supply and resistance to debasement make it an appealing store of value for investors worldwide.
Over 75% of Bitcoin holders are long-term investors who have held onto their coins for at least a year. With such strong faith and belief in Bitcoin, coupled with the upcoming halving event in 2024, Bitcoin has the potential to experience significant growth in the future.
Hot Take: Bitcoin’s Resilience Amidst Dollar Rally
While the dollar has been on a strong rally, Bitcoin has managed to defy expectations and continue its upward trajectory. This is a testament to the growing strength and resilience of Bitcoin as an asset class. Despite the correlation between the dollar and risk assets, Bitcoin has shown that it can thrive even when the dollar is performing well.
With its limited supply and appeal as a hedge against inflation, Bitcoin remains an attractive investment for long-term holders. As more investors recognize its potential and with the upcoming halving event, Bitcoin could see even greater gains in the coming years.
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