‘As the dollar weakens, Bitcoin is poised for new highs’

According to the trader's analysis, BTC, which generally has an inverse correlation with the dollar, is poised for new highs. Crypto Ed stated, "The long-term outlook for the dollar index will help BTC beam toward new ATHs," while pointing to the index heading toward the 92 level.

Although the relationship between BTC and the dollar index has weakened recently, it has been observed that the latest changes in the Fed's macro policy are now generally strengthening Bitcoin and suppressing the dollar looking forward.

With inflation showing a downward trend in the US, it is expected that the Fed will take a step back from its monetary tightening policy and increase liquidity. It is a known fact that potential interest rate cuts will benefit risky assets.

The dollar lost value rapidly this week as macro data showed the impact of monetary tightening on inflation. The US dollar index (DXY) has fallen more than 2 percent since the beginning of the week and is currently at its lowest level since mid-August, with levels below 102.

However, in contrast, another economist's analysis suggested that this would not be good timing for risk assets. Economist Lyn Alden said, "Global liquidity indicators have started to stall somewhat after their recent rise, and reverse repos did not run out in the first half of December. The recent dovish Fed and the drop in DXY have potentially triggered a bit more liquidity."

In a later comment, Alden drew attention to the activity in the commodity market due to hopes that markets would cut interest rates in 2024. Economist Alden used the following expressions in her assessment: "The DXY fell again, and a parallel recovery was seen in crude oil and other commodity markets. In the last 24 hours, the market has done a quite remarkable repricing in interest rate futures expectations."

Data from the Fed shows that its balance sheet increased by approximately 2 billion dollars this month for the first time since August.

News Source: 12punto