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The dollar falls against the euro What does it have to do with the rally in bitcoin?

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The current rise in cryptocurrency is due, among other things, to the aggressive monetary policy of the US Federal Reserve in its attempt to fight inflation.

The value of bitcoin in recent days has grown by more than 7% and is currently trading for approximately 21.000 dollars, while ether has jumped from 17 %. During this week, the 30 top cryptocurrencies by market capitalization , with the exception of the ‘stablecoin’, whose value is linked to that of the dollar, recorded gains, according to data from CoinMarketCap.

At the same time, in recent weeks the dollar has fell against the euro , and this Saturday it is trading at 1:1. The DXY index is also at a three-week low. This indicator influences the behavior of bitcoin and the crypto market as a whole, explained the head of the analytical department of AMarkets, Artiom Deev, in statements to RBC.

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The DXY measures the value of the US dollar relative to other fiat currencies, but since a few 000 years has also been appreciating a constant trend: when that index goes up, bitcoin goes down, and vice versa, Deev said. The analyst believes that the current rise in bitcoin is due, among other things, to the aggressive monetary policy

of the US Federal Reserve USA in its attempt to fight against inflation.

A new fall in cryptocurrencies?

The governors of the US Federal Reserve will meet next week and are expected to return to raise interest rates in 75 basis points, up to a total of 4%. According to the digital asset specialist of the Finmir platform, Igor Pan, if this aggressive policy is maintained in the coming months, the price of bitcoin could fall until the 15.000 Dollars or even more, while the ether would drop to a rank of 1.02 dollars.

Pan considers that there is no certainty that the current upward trend of cryptocurrencies continues, and predicts that in the coming days a growth in the demand for the US currency could be observed.

Global recession

Currently, the determining factor for the crypto market , is not the dollar or its position with respect to other currencies, but the situation around the global economy, he points out Artem Deev, who has no doubt that in the near future a strong recession may start, not only in the European Union, but also in the United States.

In such a situation, investors will avoid volatile assets such as cryptocurrencies, something they have been doing for several months, undermining the crypto market, he added. In addition, he forecasts that digital currencies could experience a new rally during the first half of 2023, when the Federal Reserve eases its monetary policy.

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