Yes, there’s correlation in the financial markets.
Bitcoin stalled, and the remaining financial markets seemed to follow it. Our editors won’t go as far as saying Bitcoin now influences the Dollar, but the markets aren’t far from this evolution.
Here’s a reliable overview of what’s brewing in this coming week of crypto and blockchain.
Correlation With Bitcoin and the Federal Reserve
As the Federal Reserve poises to lax itself on rates, we find Bitcoin and the Dollar correlating. It’s significant because rates haven’t been lowered in over two years! What will happen?
What seems like a phenomenon in the financial market could become a monsoon of sorts.
Here Is the Breakdown—Bitcoin, including the entire crypto market, took a beating last week of August 12th. With rates expected to be cut for the first in a long time, the current correlation that Bitcoin has with the dollar might send crypto back a few notches too. The Dollar certainly fell.
We are already seeing a stalemate in crypto prices and only small surges in liquidity.
These behaviors are a reflection, for the moment, of what the global reserve currency is doing.
Here Are the Fundamentals—Lower rates in the U.S. are likely, be it now or later, to lead to a cheaper Dollar. As the Dollar falls, Bitcoin would have to readjust its correlation with the USD to avoid also falling. If not, as the dollar declines, due to lower interests, so will the crypto market.
We don’t expect it to be a wipeout of the financial markets but certainly a strong, visual trend.
Correlation In Financial Markets So Strong
It’s because the financial market is largely invested in crypto through the USD. The major financial institutions, being Grayscale, iShares and Invesco, that offer Bitcoin ETFs are even American firms. They buy and sell, even if to buy foreign currencies, by using U.S. Dollars first.
This puts the crypto market, to varying degrees, on the back of the USD. It funds so much of it.
If the USD falls, crypto will get pressured as the world’s leading investment fiat is also lowered.
Can Bitcoin Avoid Falling With the USD?
There are two ways Bitcoin can take, which aren’t speculated but simple facts.
Bitcoin will either rise or fall as U.S. interests fall.
To avoid falling, Bitcoin has to shift its USD correlation or, more specifically, peg itself to the Euro. A falling dollar is almost certainly the result of a temporarily rising Euro and vice versa.
We already see the fall of the dollar aligning to the correlation of both a rising BTC and Euro.
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The Technical Data Is Revealing …
This is what the markets are showing beginning the week of August 19th. In the prior weekend’s trading sessions, the crypto market worked against a rising Euro and falling Dollar.
Investors are expecting this trend to continue if not heavily impact markets this coming week.
By pushing up to 1.10 against the Dollar, the Euro positions itself to aim for 100-percentage points more. That price is at 1.11 against the dollar and could get hit in as little as two weeks.
Only if Bitcoin leverages the liquidity of a rising Euro can it avoid depreciating with the Dollar.
Last Week’s Tickers to Start This Week:
- Bitcoin (BTC)—down -1.85%
- Ether (ETH)—down -1.86%
- Ripple (XRP)—down -1.96%
- Lite Coin (LTC)—up +10.06%
- Tron (TRX)— up +3.83%
