Today, the Dollar Currency Index saw a death cross on the daily timeframe. Bitcoin, as an asset trading against USD, is especially susceptible to strength or weakness in the greenback.
But what exactly happens when the dollar death crosses and what has this meant in the past for crypto?
DXY Dollar Currency Index Suffers Ominous Signal
Bitcoin was created as the anti-fiat solution in the face of unprecedented quantitative easing and big bank bailouts.
In many ways, its arch enemy should naturally be the almighty dollar. BTC also trades against USD as the primary conversion rate and most dominant trading pair.
When the dollar is strong, Bitcoin tends to be weak and vice versa. Today, the dollar showed the world a potential sign of weakness with a death cross on the DXY Dollar Currency Index.
A death cross appears | DXY on TradingView.com
What Does The Death Cross Mean For USD?
The DXY is the USD trading against a weighted basket of other top currencies like the EUR, GBP, and JPY. Although it doesn’t include Bitcoin, BTCUSD appears to be especially sensitive to golden and death crosses in the DXY.
A death cross occurs when the 50-day moving average crosses below the 200-day moving average, and a golden cross when the 50DMA passes above the 200DMA. Each are an early possible signal of a trend change.
The DXY just death crossed on the daily for the first time since its golden cross in late July 2021. While this might not seem overly significant, the data suggests otherwise.
How Bitcoin reacts to dollar death crosses | BTCUSD on TradingView.com
Bitcoin Gets 359% Boost On Average, History Shows
When comparing from 2015 through today, the DXY has death crossed a grand total of six, including today’s signal. Three such crosses took place from 2015 to 2017. Two more took place in 2020, just ahead of the most recent bull run.
Across the five signals since the 2015 bear market bottom, Bitcoin price climbed on average 359%. The three weakest signals resulted in between 64% and 120% each and saw plenty of volatility at the front and back of each rally.
The two other death crosses led to more dramatic declines in the DXY and therefore much more upside in Bitcoin. These signals produced 567% in 2020 and a staggering 935% in 2017 during the final bull run that made the top cryptocurrency a household name.
How much will Bitcoin rally this time?
Follow @TonySpilotroBTC on Twitter or join the TonyTradesBTC Telegram for exclusive daily market insights and technical analysis education. Please note: Content is educational and should not be considered investment advice. Featured image from iStockPhoto, Charts from TradingView.com
Sign Up for Our Newsletter!
For updates and exclusive offers enter your email.
I’m Tony Spilotro. Behind the pseudonym, I’m a digital media executive and global remote work leader with a decade of content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck – literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn’t yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can’t yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter and feel free to drop me a line if you would like to work together.