Dollar Decline Fuels Bitcoin Optimism
Bitcoin hovered around $84,000 at the Wall Street open on 16 April, as weakening sentiment around the US dollar renewed optimism for a potential crypto market rebound. Market watchers pointed to a notable decline in the US dollar index (DXY), which recently fell near multi-year lows after failing to regain key support at the 100 mark.
The drop in the dollar comes amid intensifying US-China trade tensions, fuelling volatility across markets. While traditional safe-haven assets like gold reached new all-time highs above $3,300 per ounce, Bitcoin has yet to show similar gains. Analysts, however, believe that may soon change.
“DXY is dropping at its fastest pace since 2023,” said crypto trader BitBull in a post on X (formerly Twitter). “Back then, Bitcoin had already bottomed in Q4 2022 and went on to rally over 200% within a year. I guess it’s time for BTC to repeat the 2023-24 rally.”
Goldman Sachs Flags Overvalued Dollar
Support for a bullish Bitcoin narrative also comes from Goldman Sachs research, which indicates that the US dollar remains significantly overvalued. Andre Dragosch, European Head of Research at Bitwise, shared insights from Goldman showing considerable scope for further dollar depreciation.
“NOTE: US Dollar is still significantly overvalued according to GS,” Dragosch wrote, suggesting that a weaker dollar could provide upside potential for Bitcoin and other crypto assets.
Historically, a declining dollar has often coincided with bullish trends in Bitcoin and other risk-on assets, as investors seek alternative stores of value.
Bitcoin Yet to Emerge as a Safe Haven
Despite gold’s strong performance, Bitcoin has not yet caught a “safe-haven bid,” according to crypto trading firm QCP Capital. In a recent update, the firm noted that Bitcoin’s narrative as an “alternative store of value” has not gained significant traction in the current macroeconomic climate.
“Positioning remains defensive. Participants are still focused on hedging their downside until greater clarity emerges,” QCP stated.
With the S&P 500 and Nasdaq Composite down 1.4% and 2.2% respectively at the time of writing, broader market uncertainty continues to weigh on risk assets, including cryptocurrencies.
Cautious Bullish Signals on Charts
Some technical analysts, however, see early signs of bullish momentum forming. Popular trader Luca pointed to a potential “Inverse Head and Shoulders” pattern on Bitcoin’s 4-hour chart — a classic bottoming signal.
“If we manage to hold a Higher Low in the coming days, it could confirm a trend reversal,” Luca noted.
Meanwhile, crypto analyst Michaël van de Poppe observed that Bitcoin is consolidating between key price levels. He sees potential for a strong breakout if Bitcoin retests resistance near $87,000.
“Bitcoin is still nicely consolidating between the two levels,” van de Poppe said. “The test at $87K did happen, and I think that we’ll see a big breakout once we retest it again. What’s next? Likely a run to all-time highs at the end of this quarter.”
As macroeconomic uncertainty continues and the dollar struggles to regain strength, many investors are now eyeing Bitcoin’s next move, hoping for a repeat of its dramatic 2023 rally.
