The US dollar is starting to weaken again as sellers push the US Dollar Index (DXY) down, which could bolster Bitcoin’s momentum (BTC) short-term.
Alternative assets such as Bitcoin and gold are priced against the dollar. Hence, when the DXY starts to fall, it often causes BTC to rebound against the dollar.
The dollar’s share of global reserves is declining rapidly
According to Holger Zschaepitz, a market analyst at Welt, the US dollar’s share of global reserves is rapidly declining as countries such as Russia de-dollarization strategy and opt for gold.
When the pandemic was declared in the first quarter of 2020, demand for the dollar increased as investors fled to cash as it is the global reserve currency.
However, due to several factors, including the presidential election and the negative outlook for COVID last year, the dollar struggled to outperform other currencies such as the Japanese yen and the Swiss franc.
Dollar in decline. While the dollar’s share of global reserves initially increased at the start of the pandemic, it has since declined and is now only a 59% – 1.5 percentage point decline in QoQ and the lowest since 1995. Decrease in part due to depreciation, but also due to active sales in USD. “
If the US dollar continues to decline, there is a good chance that Bitcoin will continue to recover in April.
Historically speaking April has been a strong month for Bitcoin over the past ten years, with positive gains for five consecutive years since 2016.
– Bitcoin Archive (@BTC_Archive) March 29, 2021
In addition, Danny Scott, the CEO of the Bitcoin exchange CoinCorner, said that the law of averages put Bitcoin at $ 83,000 in April. He wrote
“Law of averages gives #Bitcoin a target price of $ 83,000 for April. 10-year average in April + 51%.”
Miners appear to be collecting Bitcoin
On top of the favorable macro factors for Bitcoin, Lex Moskoviski, the CIO at Moskoviski Capital, noted that miners recently started expanding their BTC holdings.
In one day, miners added 4,380 Bitcoin, which the quant trader and investor described as a growing trend. He said
“Miners really started ramping up their positions. 4,494 #Bitcoin stacked on total today. Another 4,380 #Bitcoin stacked by miners yesterday. It does seem like a trend.”
When miners sell their holdings, Bitcoin typically sees a downturn as this can lead to highly leveraged orders showing in the futures market. cascading windings
If miners hoard Bitcoin and stack BTC with the expectations the cryptocurrency will appreciate, it will reduce the likelihood of a serious sell-off in the near future.
In the near term, it remains critical whether Bitcoin remains above the USD 58,000 support area. If it continues to consolidate above it, the chances that it will see a strong breakout above the USD 60,000 resistance level is skyrocketing.