He Said Follow This Data For Bitcoin, Shared Year-End Expectations!

James Butterfill, senior analyst at Coinshares bitcoinHe shared a blog post in which he wrote his expectations for the end of the year.

Drawing attention to the inverse correlation between Bitcoin and the dollar index (DXY) in his article, Butterfill said the following about the possible moves of the FED, DXY and Bitcoin:

“It became clear at the last Jackson Hole meeting that the US Federal Reserve (FED) was not about to “return” to a softer monetary policy stance.

The impact of this on interest rate sensitive assets such as the US dollar, equities and bitcoin was immediately apparent.

Bitcoin and the US Dollar Index (DXY) have a high inverse correlation. Looking at the weekly data since the beginning of 2018, it currently correlates around -70%

Especially after the hawkish comments from the FED, the view of DXY from a valuation and sentiment perspective is crucial in determining the short-to-medium-term outlook for bitcoin prices.

While the US dollar is unlikely to return to its early 1980s levels, many metrics such as dollar valuation, dollar carry trade and dollar sentiment still suggest it has somewhere to go.

Conclusion:

From most metrics, whether it’s valuation, trading or sentiment, we conclude that DXY could gain even more in the near term in a scenario where it appears overpriced but a recession is not anticipated.

It seems that the terminal interest (the interest that should be) in the USA will peak before other countries. This, combined with the possibility of weaker economic data in the US, indicates that DXY is likely to rise and peak by the end of the year.

Due to the highly inverse correlation of bitcoin price with DXY, a significant upside breakout for bitcoin price this year is unlikely unless we see an unexpected deterioration in macroeconomic data.”

You can find Butterfill’s article here.