Bitcoin: This Had Only Ever Happened 3x Before

Summary

Bitcoin (BTC) has recently experienced lower lows, leading many investors to question if it's entering a bear cycle. However, a rare signal from the US Dollar Strength Index (DXY) suggests a potential rebound for BTC, as historical patterns show that DXY declines have often preceded significant BTC price surges. The video explores past instances of this signal, highlighting how BTC typically undergoes a brief period of consolidation before experiencing price appreciation. With favorable indicators like the global M2 money supply, there is optimism for a BTC rally in the near future.

Takeaways

• 😀 The US Dollar Strength Index (DXY) has a historically inverse relationship with Bitcoin (BTC), where a falling DXY typically leads to BTC price appreciation.
• 😀 The DXY recently dropped by over 3.4% in a seven-day period, an event that has occurred only three times in BTC’s history.
• 😀 Each time the DXY dropped significantly, it was followed by a period of BTC price recovery, often with a brief consolidation phase before rapid appreciation.
• 😀 In 2015, a similar DXY drop preceded BTC reaching over $160,000 in just a few weeks, suggesting the potential for a major rebound in the current cycle.
• 😀 In 2018, following another DXY decrease, BTC recovered quickly after a period of consolidation and sideways price action.
• 😀 The most recent occurrence of a DXY drop (post-2022 bear cycle) mirrors previous trends with consolidation before a rebound, potentially leading to a positive BTC price move.
• 😀 The NASDAQ index, which is highly correlated with BTC, has shown similar behavior to BTC after DXY drops, with positive returns following these declines.
• 😀 After a DXY drop, the NASDAQ saw significantly higher-than-average returns, reinforcing the idea that a similar effect could happen with BTC.
• 😀 The US M2 money supply has recently increased, historically signaling a potential two-month lag before BTC experiences positive price action.
• 😀 While BTC is currently struggling, the historical relationship between DXY drops and BTC’s price suggests that a recovery is possible, possibly within the next two months.
• 😀 If past trends hold, BTC could experience a price range between $80,000 and $90,000 before a significant rally starts in the coming weeks or months.

Q & A

What is the relationship between the US Dollar Strength Index (DXY) and Bitcoin (BTC)?

There is an inverse correlation between the US Dollar Strength Index (DXY) and Bitcoin's price. When the DXY rises, BTC typically struggles to appreciate, and when the DXY decreases, it generally creates favorable conditions for BTC to gain value.

How often has the DXY dropped at a rate of 3.4% in one week, and what is the significance of this?

This rare drop in the DXY has occurred only three times in Bitcoin's price history. Each time, it has been followed by a significant shift in Bitcoin's price, typically leading to periods of consolidation before a substantial price rebound.

What historical trends are evident when the DXY experiences a steep decline?

Historically, a sharp drop in the DXY has been followed by a period of consolidation in Bitcoin's price. After this consolidation phase, Bitcoin usually experiences rapid price appreciation, though there may be some delay before this positive reaction occurs.

What was the price action of Bitcoin following the DXY retracement in 2015?

Following the 2015 DXY retracement, Bitcoin's price surged dramatically after a brief consolidation period. This pattern of consolidation before a sharp rise in BTC’s price has been observed in other instances as well.

How does the DXY's impact on Bitcoin compare to its influence on traditional markets like the NASDAQ?

The DXY's decline has a similar positive impact on traditional markets like the NASDAQ as it does on Bitcoin. After a significant DXY drop, markets such as the NASDAQ often experience a period of consolidation before outperforming, which is also seen with BTC.

What correlation does the M2 money supply have with Bitcoin's price action?

The M2 money supply shows a strong correlation with Bitcoin's price action, with a lag of about two months. A massive increase in the M2 money supply has historically been a bullish indicator for Bitcoin, which could positively affect its price in the coming months.

Why does the analyst suggest a period of consolidation for Bitcoin despite the DXY's decline?

The analyst suggests that even though the DXY's decline creates favorable conditions for BTC, there may be some initial consolidation or sideways price action before BTC experiences a significant rebound. This delay is common following such a sharp drop in the DXY.

What impact did the DXY's drop have on the NASDAQ’s 30-day returns historically?

Historically, following a 3.4% drop in the DXY, the NASDAQ's 30-day returns significantly outperformed the typical average. The returns were around 4.29%, compared to the NASDAQ's baseline of 1.91%, indicating positive market performance after such a DXY decrease.

What is the expected timeline for Bitcoin's price to react positively to the DXY's drop?

Given the historical lag between the DXY's decline and Bitcoin's positive price action, it is expected that BTC might experience a rebound in the next couple of months, potentially around late April or May.

What is the broader significance of the DXY's behavior for Bitcoin and other markets?

The behavior of the DXY is a significant indicator for predicting Bitcoin's price movements, as well as influencing traditional markets like the NASDAQ and S&P 500. A sharp decline in the DXY has historically led to positive price reactions across multiple markets, suggesting that this trend is not a coincidence but a well-established pattern.