BTC Correlation with DXY

BTC Correlation with DXY


2023-05-15 16:29:25

Market situation

US stocks fell yesterday in all three indexes Dow, S&P 500 and Nasdaq. Stock futures fell at NAS FUT 0.11%, the other two indexes were almost flat. Oil contract increased to 77 USD/barrel. And gold holds around 1836 USD/ounce.

Bitcoin remains flat around $23,500 to $23,700. Altcoins correcting the same BTC trend. By the end of February, the price of BTC was almost unchanged after January had increased by more than 40%. This is a rare month in the history of BTC where the price at the beginning and end of the month is comparable.

Over the past year, the market often reacts badly to good news. Because people fear the good news will cause the Fed to raise interest rates more strongly, leading to a recession. However, since the beginning of this year, the market reaction has been different and less reactive than the good news as before. Sometimes, investors don’t know how to react to good news.

Leading US retailer Target also reported earnings that beat Wall Street expectations for the first time in a year. Their holiday quarter sales were up about 1% year over year. However, Target also said that its margins and margins have narrowed, and offered a cautious full-year outlook, saying customers are dropping more discretionary items and focusing only on Essential products.

Target’s results are in line with other retail companies that have previously published reports. It also shows that the economy is still good but has slowed down. Last week, the market received information that the PCE index was not as expected, so most investors are thinking that the Fed will raise interest rates by 0.25% at the next meeting.

Inflation and interest rates continue to affect the DXY index, which reflects dollar strength. Recently, the DXY index has rebounded. Although the correlation is not obvious in the short term, in the long term, the DXY index is negatively correlated with the BTC price. A chart shared on Twitter shows many such examples in history.

The DXY index is influenced by many factors. There are timing factors such as interest rate or monetary policy of other countries that will affect DXY. For this index to cool down, the Fed needs to have a more dovish tone. And other countries like the UK, Japan,… need to be more drastic in their interest rate decisions. The high price of fiat currency is not necessarily good for the country, but it will have both sides of impact depending on how the economy has import and export structure.

Recently, an index that has also grown well is the Manufacturing Purchasing Managers’ index (MPMI). China’s National Bureau of Statistics also reported that the country’s official manufacturing purchasing managers index rose to 52.6 in February, the highest level since April 2012. This index above 50% indicates activity. Production activity is good and there are more orders in this group of businesses. China has reopened and the circulation of goods should be better.

Bitcoin is getting scarcer

Last year, a lot of bad news for the crypto market like Voyager, FTX, LUNA, etc. company collapsed but it also had a positive effect that made many investors withdraw BTC from exchanges and save themselves. store. This led to a sharp drop in the number of BTC on exchanges (orange line) and now only about 2.2 million BTC. We have yet to see any signs of BTC being pushed back to the exchange.

The latest data shows that exchanges have less BTC to buy than at any point since the beginning of 2018. Glassnode confirms that as of February 2023, exchange reserves are at their lowest level in 5 years. year. The number of BTC on exchanges today is even less than that of the oldest hodler addresses. According to Glassnode, the total number of BTC inactive for ten years or more stands at 2,645,956 BTC, 16% more than the total BTC on exchanges.

The amount of BTC in wallets that have been inactive for more than 10 years may be wallets that have lost their private keys or their owners have passed away. It can also be owned by people who want to store BTC for the long term. Through the above data, we can also see that the supply of BTC has been decreasing. Until the supply decreases more sharply through the BTC halving event and the demand increases sharply, we will see an increase in the price of BTC. This is still a good time to accumulate Thuan’s BTC.

An interesting share of Joe Burnett on Twitter said that, to be able to attack 51% of the BTC network and want to change its entire history, one person needs 700 days to succeed. At the same time, it is then necessary to maintain the previous long chain that was created when the 51% attack was successful. This is very difficult to do because it requires a very large amount of money and an extremely large number of miners.

Update on FTX

Nishad Singh, former technical director of FTX, pleaded guilty on February 28, 2023, to conspiracy to commit securities fraud, conspiracy to commit money laundering and conspiracy to commit fraud. law on fundraising for election campaigns. Nishad is also negotiating with the SEC and CFTC and providing the necessary information.

Last December, FTX co-founder Gary Wang and former CEO of Alameda Research, Caroline Ellison, both pleaded guilty to the charges. Gary Wang pleaded guilty to conspiracy to commit wire fraud, conspiracy to commit financial fraud. Ellison pleaded guilty to wire fraud, conspiracy to commit financial fraud and conspiracy to launder money. Currently, the heads of FTX are only Sam Bankman-Fried awaiting trial.

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