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A weakening US dollar could beryllium bullish for Bitcoin, but 2 metrics could beryllium origin for interest successful the abbreviated term, according to Real Vision crypto expert Jamie Coutts.
“While my model is turning bullish arsenic the dollar plunges, 2 metrics inactive rise alarms: Treasury Bond volatility (MOVE Index) and Corporate Bond spreads,” said Coutts successful a March 9 station connected X.
The expert framed Bitcoin arsenic a “game of chicken” with cardinal banks, presenting a “cautiously bullish” outlook contempt these concerning metrics.
The US Dollar Index (DXY) has declined to a four-month debased of 103.85 connected March 10, according to Market Watch. DXY is an scale of the worth of the greenback comparative to a handbasket of different currencies.
Coutts explained that US Treasuries relation arsenic planetary collateral and accrued Treasury volatility forces collateral haircuts, tightening liquidity.
The MOVE Index, which is simply a measurement of expected volatility successful the US Treasury enslaved market, is presently unchangeable but climbing, helium observed.
MOVE Index and US dollar Index. Source: Jamie Coutts
“With the dollar’s accelerated diminution successful March, 1 mightiness expect volatility to compress, oregon if it doesn’t, for the dollar to reverse,” which is bearish, helium said.
Heightened Treasury volatility tin pb to tighter liquidity conditions, which could perchance unit cardinal banks to intervene successful ways that mightiness yet payment Bitcoin, helium suggested.
Meanwhile, firm enslaved spreads person been widening consistently implicit 3 weeks, and large firm enslaved dispersed reversals person historically coincided with Bitcoin terms tops, Coutts said.
Coutts concluded that, overall, these metrics overgarment a antagonistic representation for Bitcoin. “Still, the dollar’s depreciation— 1 of the largest successful 12 years this period — remains the superior operator successful my framework,” helium added.
Related: Bitcoin dips to $80K successful ‘ugly start,’ could retest cardinal resistance: Hayes
On March 6, Bravos Research said that a declining DXY “could beryllium a large tailwind for risk-on assets,” specified arsenic stocks and crypto.
Coutts besides identified different bullish factors, including a planetary contention for strategical Bitcoin reserves oregon accumulation via mining, Michael Saylor’s Strategy adding different 100,000 to 200,000 coins to its BTC treasury this year, a imaginable doubling of spot ETF positions, and accrued liquidity.
“Think of Bitcoin arsenic a high-stakes crippled of chickenhearted with the cardinal planners. With their options dwindling — and assuming HODLers stay unleveraged— the likelihood are progressively successful the Bitcoin owner’s favor.”Magazine: Bitcoin’s likelihood of June highs, SOL’s $485M outflows, and more: Hodler’s Digest
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