Crypto analyst Benjamin Cowen posted a new video on his YouTube channel on December 10th. He analyzed several charts highlighting the sharp drop in the DXY, the US dollar index, observed in recent weeks. This index has fallen more than 8% from its peak of 114.77, which it reached this year. For Cowen, this notable drop may not bode well for what bitcoin (BTC) traders are thinking.
Bitcoin Bullish Shouldn’t Rejoice Too Soon
Most traders in the crypto market pay attention to the movements of the US dollar index. Quite often, when the DXY is falling, it means that investors are exchanging their dollars for risky assets like cryptos. Similarly, a rise in the index portends a liquidation of risky assets in favor of the US dollar.
Crypto analyst Benjamin Cowen summed it up nicely. He stated : “Historically, there is an inverse correlation between Bitcoin and DXY“. However, he added:We have already seen the inverse correlation between the DXY and risky assets break down coming out of periods of high inflation“. In this context, the crypto analyst urged bitcoin traders not to declare victory too quickly.
Benjamin Cowen said:Before you ring the victory bell on the end of the US dollar index rise, remember that if you had assumed that similar pullbacks in history also led to the end of the dollar’s rise, you would have been sorely disappointeds“.
The comparison with the recession of the 80s
Benjamin Cowen recalled that during the period of high inflation in the 1980s and the internet crash that caused a deep recession, “the dollar did not collapse right after its first initial peak“. First there had been a fallfor a certain time‘, then the index is ‘gone up again“.
The analyst pointed out that if things go as he imagines, “early next yearif it is not done yetyou would see the dollar at least start to move up and then figure out what to do from there“.
Crypto analyst Benjamin Cowen argues that it is highly likely that the DXY is currently gearing up for a remarkable rally. He adds that the bearish trend could strengthen in the crypto market. This, once the uptrend of the DXY resumes.
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