The co-founders of the cryptocurrency analytics firm Glassnode are of the opinion that a substantial Bitcoin (BTC) bull market is on the horizon, largely driven by their belief that the US Dollar Index (DXY) is poised for a decline.
Jan Happel and Yann Allemann, the co-founders who go by the name Negentropic on the X social media platform, have indicated that the DXY appears to have reached its peak.
DXY Reaches Its Peak, Signals Possible End to Bitcoin Consolidation
Fireworks in #BTC and #Crypto are expected to begin for real below 100 on #DXY. For now, we seem to have top in in #DXY as expected – and consolidation in BTC since April has come to an end. A completely newโฆ pic.twitter.com/5JmJfkFqoV
— ๐ก๐ฒ๐ด๐ฒ๐ป๐๐ฟ๐ผ๐ฝ๐ถ๐ฐ (@Negentropic_) September 29, 2023
The DXY serves as a gauge of the US dollar’s strength against a basket of six major currencies. Traders closely monitor the DXY because a weaker index implies that investors are favoring higher-risk assets such as stocks and cryptocurrencies over the US dollar.
In their assessment, they suggest that the DXY is currently forming a three-wave pattern, identified as the A-B-C wave according to Elliott Wave theory. They anticipate that the DXY will dip below 100 by year-end and complete the C wave correction, reaching 89.34 during the first half of the next year.
Their analysis also implies that as the DXY experiences a decline, the iShares Russell 2000 ETF (an exchange-traded fund representing small-cap stocks) is expected to surge.
Previously, these traders observed the increasing strength of the DXY, which was exerting downward pressure on Bitcoin.
Despite widespread bearish sentiment toward the US dollar, the Dollar Strength Index recently reached its highest point in nearly a year. This development, contrary to the prevailing view, signifies a significant shift and a potential consolidation phase.
The dollar is making a comeback.
The Dollar Strength Index (DXY) hit its highest point in almost a year. This contrary to the widely-held bearish dollar view, represents a strong shift, now entering a phase of potential consolidation.
DXY needs to cool off and retest previousโฆ pic.twitter.com/uoXVJVbKhU
— ๐ก๐ฒ๐ด๐ฒ๐ป๐๐ฟ๐ผ๐ฝ๐ถ๐ฐ (@Negentropic_) September 27, 2023
According to the traders, the DXY needs to cool off and potentially retest prior resistance levels that could serve as support for Bitcoin’s recovery. Moreover, greater market liquidity is likely to benefit Bitcoin in the long run, as investors seek alternative assets to hedge against sluggish economic growth.
The traders also cited the predictions of macro expert Henrik Zeberg, who anticipates that the DXY’s peak will hover around the 106 level before undergoing a correction. As of the current writing, the DXY stands at 106.07.
The anticipated reversal in the DXY, as forecasted by Henrik Zeberg, is expected to be a catalyst for the upcoming rally in BTC. It appears that the consolidation phase in Bitcoin since April 2023 is nearing its conclusion.
At the time of writing, Bitcoin is trading at $26,845, reflecting a 1.1% decline in the past 24 hours.
