Reprieve or a fresh start? – If you regularly follow the course of Bitcoin (BTC) and the crypto market, the recent small rise will not have escaped your notice. With bitcoin back above 20,000 dollars and one ether (ETH) above $1,500, the cryptosphere is breathing a little better. But what is he hiding behind this increase? Difficult to answer, but let’s try.
The Fed wants to calm things down after playing the arsonist
If the redemption of Twitter by the whimsical billionaire Elon Musk can explain the sharp rise in Dogecoin (DOGE) in recent days, the overall rise in the crypto market is likely coming from elsewhere.
If the very low volatility of recent weeks called sooner or later for a significant movement at the rise or the decrease why did the market choose the first option? Even if that does not necessarily explain everything, there is still a chance of strong influence vis-à-vis the actions of the Federal Reserve American (the Fed).
Indeed, after having printed billions of dollars to combat the economic crisis due to Covid restrictions, the United States (and many others) find themselves with high inflation (8.2%). To curb the inflationary machine, the Fed has for some months switched to monetary tightening. It goes through a rise strong and supported by its key rates at the point freak out the United Nations. Because it reinforced the value of the dollar American against foreign currencies.
Is Bitcoin benefiting from a US dollar that is (finally) starting to soften?
the “dollar index” (DXY) compares the strength of the greenback to a basket of other major foreign currencies. This index knew an uninterrupted increase for several months, as shown in the graph below.
But for a few days, the signature would begin to indicate that the dollar has reached a peak (at least temporarily). Is it due to the soothing tone of the Federal Reserve, which despite a probable further increase in its key rate, explains that it will probably be less aggressive from now on?
In any case, this improvement in prices is also visible on the stock market in exchanges, in addition to the crypto-asset market. Another sign of a Change of direction in central banks: the Bank of England (BoE) is downright already back to the money printing stage in an attempt to save government bonds (UK debt).