The US dollar is starting to weaken once again, with sellers pushing the US Dollar Index (DXY) down, which could strengthen the Bitcoin (BTC) momentum in the short term.
Alternative assets like Bitcoin and gold are quoted against the dollar. Consequently, when DXY starts to fall, it usually causes BTC to rise against the dollar.
The dollar’s share of global reserves is falling rapidly
According to Welger’s market analyst Holger Zschaepitz, the US dollar’s share of global reserves is rapidly decreasing as countries like Russia pursue a strategy of de-dollarization and opt for gold.
When the pandemic was declared in the first quarter of 2020, demand for the dollar increased as investors fled for money, because it is the global reserve currency.
However, due to several factors, including the presidential elections and the negative outlook for COVID over the past year, the dollar struggled to outperform other currencies, such as the Japanese yen and the Swiss franc.
Zschaepitz said:
“OOPS! Declining dollar. Although the dollar’s share of global reserves initially increased at the start of the pandemic, it has declined and is now only 59% – a decline of 1.5 pp in the quarter and the lowest since 1995. Part of the decline due to depreciation, but also due to active selling in US dollars. “
If the decline of the US dollar continues, there is a high likelihood that Bitcoin will continue to rise in April.
Historically, April has been a strong month for Bitcoin for the past ten years, posting positive gains for five consecutive years since 2016.
April is a good month for #Bitcoin
pic.twitter.com/3csQMSdcaA– Bitcoin file (@BTC_Archive) March 29, 2021
In addition, Danny Scott, the CEO of Bitcoin exchange CoinCorner, said the averages law puts Bitcoin at $ 83,000 in April. He I wrote:
“The law on averages gives #Bitcoin a price target of $ 83,000 for April. 10-year average in April + 51%.”
Miners appear to be accumulating Bitcoin
On top of the favorable macro factors for Bitcoin, Lex Moskoviski, the CIO of Moskoviski Capital, pointed out that miners have recently started to increase their holdings in BTC.
In a single day, miners added 4,380 Bitcoin, which the quantitative trader and investor described as a growing trend. He said:
“Miners started to increase their positions. 4,494 #Bitcoin accumulated today in total. Another 4,380 #Bitcoin accumulated by miners yesterday. It looks like a trend, in fact.”
When mining companies sell their stakes, Bitcoin typically retracts as it can cause highly leveraged orders in the futures market to see cascading liquidations.
If miners are accumulating Bitcoins and accumulating BTC with expectations that the cryptocurrency will appreciate, this will reduce the likelihood of a strong settlement in the foreseeable future.
In the short term, whether Bitcoin will remain above the $ 58,000 support area remains the key. If you continue to consolidate above it, the chances of seeing a strong breakout above the $ 60,000 resistance level are greatly increased.