On April 4, the US dollar index (DXY), which measures the greenback’s performance against a basket of six major foreign currencies, fell 0.5% after declining demand for workers in the world’s largest economy.
BTC price points to dollar breakout at 2-month lows
Bitcoin (BTC) has grown 3.5% since then to sit at around $28,800, continuing its extremely negative correlation with the dollar. The BTC/USD pair is now targeting a breakout of $30,000, a psychological resistance level, on hopes that the greenback will weaken further in 2023.
Meanwhile, the February Job Vacancy and Job Turnover Survey (JOLTS) showed the number of official job openings fell below 10 million for the first time since May 2021.
In other words, while there were two jobs available for every unemployed person at some point last year, there are now just 1.67.
Interestingly, the implicit fed funds rate for January 2024 declined after the latest JOLTS data, similarly in the midst of the March bank failures.
Rate expectations are now around 4% compared to around 5% before the banking crisis, suggesting that the market is expecting the Federal Reserve to halt, if not reverse, its interest rate hike program.
It’s worth noting that the JOLTS readings are retrospective, meaning the latest data does not include the sudden wave of bank failures in March and the well-publicized layoffs at McDonald’s, Walmart, and every tech company, including Amazon and Apple. .
Therefore, the market is likely to see even worse JOLTS data in the coming months. This could also coincide with the upcoming Federal Open Market Committee meeting in May, provoking a bearish response, as a Reuter survey of currency strategists anticipates.
Lower rates should push the dollar lower, and in turn Bitcoin higher, as long as their traditionally inverse price correlation holds.
dollar $DXY looks fundamentally worse and worse for each year that goes by. Last #crypto bull run we didn’t really have a proper narrative, but for the next we will. Everything is aligning for a monster run after 2023
—Mac (@MacnBTC) April 3, 2023
The $DXY dollar is looking fundamentally worse and worse with each passing year. The last cryptocurrency bull run we didn’t really have a proper narrative, but for the next one we will. Everything is lining up for a monster run after 2023
Bitcoin Price Paints a Bullish Continuation Pattern
From a technical point of view, the Bitcoin price is pointing to a prolonged rally in April as it draws an ascending triangle pattern.
An ascending triangle is a bullish continuation pattern that appears when price moves between horizontal trendline resistance and rising trendline support.
It is completed when the price breaks out of the triangle in the direction of the previous trend and rises as much as the maximum height of the triangle.
Applying the scenario in the current BTC price trend brings $31,000 as its next bullish target, around 8.5% above current price levels.
Meanwhile, the DXY has the potential to drop another 1% in April to test the lower range of its long-standing support channel (purple) at around 100.86.
The lower rates scenario risks pushing the DXY below the support channel to a new yearly low, with some analysts anticipating a drop towards 95.
Ultimately, this scenario is likely to provide another boost for cryptocurrency markets and a potential $35,000 target for Bitcoin in Q2.
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