Bitcoins The sell-off late this week may have had little to do with crypto-specific factors and instead everything to do with the US dollar.
After what is now becoming a customary weekend dip in crypto prices, bitcoin actually rallied through the week, in part as the fall in the US dollar accelerated.
Bitcoin peaked for the week late Wednesday afternoon, just shy of $91,000, as the Fed held interest rates steady and attention turned to who President Trump might nominate as the next head of the U.S. central bank.
The peak coincided with a drop in the dollar index (DXY) to a multi-year low of 95.34. All things being equal, a weaker US dollar is often seen as supportive of asset prices, such as bitcoin, stocks and commodities.
Although technicians sounded the alarm that DXY below 96 meant even deeper declines for the dollar, the markets thought otherwise. The dollar began a steady rise and alongside it bitcoin began to pull back from the $91,000 level.
The dollar continued to strengthen into Thursday, with bitcoin’s losses accelerating throughout the session. Finally, Thursday night’s leak that Kevin Warsh (and his hawkish reputation) was to be nominated as Fed chairman forced another rally in the dollar and lower gap in bitcoin, with BTC ultimately capping at $81,000.
Bitcoin has managed to jump to $83,000 since then, but the dollar has continued to gain, raising questions about how sustainable the crypto’s rise can be.
