The dollar began to lose power again. As sellers cause the US Dollar Index (DXY) to fall further, this drop could strengthen Bitcoin’s (BTC) bullish momentum in the short term.
Alternative assets like bitcoin and gold are priced in dollars. Therefore, declining DXY generally results in BTC starting to rally in dollar terms.
The dollar’s share of global reserves is falling rapidly
According to Welt Market Analyst Holger Zschaepitz, the dollar’s share of global reserves is gradually decreasing as countries like Russia follow a strategy of moving away from dollarization and turn to gold.
When the coronavirus outbreak was confirmed in the first quarter of 2020, demand for the dollar soared rapidly due to investors turning to cash, the global reserve currency.
However, the dollar did not perform well compared to other currencies such as the Japanese yen and the Swiss franc due to the US presidential election and negative outlook on COVID.
Zschaepitz stated that:
“The dollar is falling. Although the dollar’s share in the global reserve increased at the beginning of the epidemic, it then began to decline and fell to 59 percent, the lowest level since 1995. The decrease is partly due to the depreciation and partly the sale of the dollar.”
If the dollar continues to weaken, the chances of Bitcoin continuing to rally in April increase.
April has been the month in which Bitcoin has shown a strong performance over the past 10 years. BTC has been generating positive returns in April since 2016.
— Bitcoin Archive (@BTC_Archive) March 29, 2021
Danny Scott, CEO of the Bitcoin exchange CoinCorner, said addressed the issue from a different angle:
“Bitcoin has yielded an average percentage of returns over the past 10 years, which means Bitcoin’s price target for April is $ 83,000.”
Miners increase savings
Another factor that gives positive signals for Bitcoin is that miners are starting to increase their BTC savings, said Lex Moskoviski, CIO of Moskoviski Capital.
Miners increased their Bitcoin savings by 4,380 BTC in a single day. Investors of this trend thinks he’s growing.
The start of miners to accumulate BTC is viewed extremely favorably as it reduces selling pressure in the short term and reflects the expectation for a price increase.
The $ 58k support level is key in the short term. If BTC consolidates above this level, the likelihood of shortening the $ 60k resistance will also increase.