The US dollar continued to appreciate after Fed Chairman Powell’s statement at the Jackson Hole meeting confirmed the Fed’s determination to fight inflation.
According to global market data, the US Dollar Index reached 109.97, breaking the record of the last 20 years.
While the US dollar was experiencing the most valuable days of the last 20 years, money outflows were seen from all risk assets, especially cryptocurrencies. An ounce of gold fell 0.82% daily to $ 1697.
How Does The Dollar Index Affect Bitcoin?
With the US dollar reaching its highest value in the last 20 years, bitcoin Cryptocurrencies, including sales, were seen. Leader cryptocurrency The currency fell 1.59% to a low of $19,540 today.
As of the moment, the most important level for BTC, which has thrown itself over $20,000 again, is the protection of $ 19800 support at this stage. Staying above this level will prevent the deepening of the declines.
In addition, while the $ 20800 level is again an important resistance, the market can breathe a little easier in the closings of 4 hours or more on this level.
On the other hand, it is seen that important on-chain data also gives a “buy signal” at this stage.
What is the Dollar Index?
The Dollar Index is a metric that measures the average value of the US Dollar worldwide. If the Dollar Index rises, it means that the dollar has appreciated worldwide.
The global appreciation of the dollar causes investors to move away from risk assets. Derivative financial instruments, especially cryptocurrencies, and then commodities such as gold and silver are also adversely affected by this situation.
Why is the Fed Raising Interest Rates?
After the pandemic, inflation got out of control around the world. Inflation, which was 1% at the beginning of the pandemic in the USA, climbed to 9%. As inflation got out of control, the FED switched to tight monetary policy.
Loose monetary policies with high monetary liquidity are abandoned. Central banks are increasing interest rates to reduce the speed at which money is spent by implementing tight monetary policies.
The United States is one of the countries that have gone to change their monetary policy. As of March 2022, the US Federal Reserve began to increase the policy rate. The policy rate, which was 0.25%, was increased to 2.50%.
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