Bitcoin The sell-off late this week might have had little to do with specific crypto factors and instead everything to do with the US dollar.
After what is now becoming a regular weekend drop in cryptocurrency prices, bitcoin was actually rising throughout the week, in part as the decline in the US dollar accelerated.
Bitcoin hit its peak for the week on Wednesday afternoon, just shy of $91,000, as the Federal Reserve held rates steady and attention focused on who President Trump might nominate as the next leader of the U.S. central bank.
The spike coincided with a drop in the dollar index (DXY) to a multi-year low of 95.34. All things being equal, a weaker US dollar is often seen as supporting asset prices such as bitcoin, stocks and commodities.
Although technicians sounded the alarm that a DXY below 96 meant even deeper declines for the dollar, markets thought otherwise. The dollar began a steady rise and at the same time, bitcoin began to pull back from that $91,000 level.
The dollar continued to strengthen into Thursday, and bitcoin’s losses accelerated throughout the session. Finally, Thursday night’s leak that Kevin Warsh (and his hardline reputation) was going to be nominated as chairman of the Federal Reserve forced another rise in the dollar and a smaller gap in bitcoin, with BTC finally bottoming out at $81,000.
Bitcoin managed to rebound to $83,000 since then, but the dollar has continued to post gains, raising questions about how sustainable the cryptocurrency’s rise could be.
