The dollar index is giving off hints of a near-term top as the price of Bitcoin shows signs of a rally.
There is a belief that the value of Bitcoin is linked to drops in the dollar.
Since stores of wealth, like Bitcoin and gold are priced against the dollar, theoretically, a decrease in the dollar index would have a positive affect on Bitcoin’s price.
As the dollar consolidated on March 3, Bitcoin went over $50,000, putting it on target to retest $51,600 resistance again.
Higher than $51,600, resistance is low until $56,000. So going past this level is vital to securing upside trajectory in the near term.
Bitcoin Jack, a well-known internet trader, who called the $3,600 low in March of 2020, stated:
“Considering we will very likely see a large $1.9T stimulus within 2 weeks, my guess is the dollar will top out there.”
If Bitcoin keeps increasing as the dollar stalls, it could let Bitcoin benefit from two trends.
First, the dollar’s lowering will naturally benefit the digital asset. Second, the coming $1.9 trillion stimulus might serve as a spark for a larger Bitcoin rally while diluting the dollar.
Bitcoin likely decreased this past week due to the uneasy economic environment, as the dollar started to go higher and bond yields increased to a yearly high.
If these conditions were the major reason for BTC’s pullback, now that bond yields are pulling back, it could give Bitcoin good momentum in the next weeks.
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