Forget Elon, here's why Bitcoin traders should be watching the US Dollar Index instead

Forget Elon, here's why Bitcoin traders should be watching the US Dollar Index instead


Bitcoin (BTC) prices fell by almost 5% on June 4, continuing the decline into the Friday session as investors grappled with Elon Musk’s cryptic tweets on the cryptocurrency, raising speculation that the Tesla CEO might dump the firm’s remaining 43,2000 BTC stash.

#Bitcoin pic.twitter.com/lNnEfMdtJf

— Elon Musk (@elonmusk) June 4, 2021

Nonetheless, Bitcoin’s move downside also coincided with a big spike in the U.S. dollar index (DXY), raising speculation that more than one factor accelerated the cryptocurrency’s dramatic plunge during the late Thursday and early Friday session.

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In retrospect, the U.S. dollar index, which measures the greenback’s strength against a basket of top foreign currencies, surged 0.18% to reach a three-week high of 90.627 after Musk’s tweet. Meanwhile, the same period witnessed Bitcoin prices crashing by 9.31% to hit an intraday low of $35,593.

The chart below illustrates Bitcoin’s immediate response to Musk’s tweet — a big red candle on hourly charts followed by extended declines. However, while not reacting exclusively to Musk’s

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