Digital asset manager CoinShares says that Bitcoin (BTC) unlikely to see much momentum higher, at least for the remainder of this year.
In a new bi-weekly report, CoinShares says the U.S. dollarindex (DXY), which pits the USD against a basket of other fiat currencies, may have more gas in the tank of its multi-month rally.
A high DXY usually implies downward pressure on most risky assets like Bitcoin.
“The DXY looks overpriced but could continue higher in the short-term while the prospect of a recession is far from conclusive. It looks like the final rate of monetary policy will peak (according to consensus) in the US before it does in its major trading partners, which coupled with the likelihood of weaker economic data in the US suggests that the DXY is likely to peak towards the end of the year.
Since bitcoin prices are highly inversely correlated with the DXY, unless we see an unexpected deterioration in macroeconomic data, bitcoin prices are unlikely to see a significant breakout to the upside this year.”
The top crypto asset manager says a reversal of the Federal Reserve’s tightening monetary policy is unlikely anytime soon, adding weight to BTC.
“For now, at least, it is clear that the US Federal Reserve (Fed) is not about to move towards softer monetary policy, as many had anticipated with the recent Jackson Hole events. This had an immediate impact on the US dollar and interest rate-sensitive assets like stocks and bitcoin.
The Fed’s hawkish rhetoric will likely have an ongoing dampening effect on the Bitcoin price outlook until their perception of macroeconomic data warrants a shift.”
CoinShares predicts continued pressure on Bitcoin barring some sort of “unexpected deterioration in macroeconomic data.”
At the time of writing, Bitcoin is trading at $19,178, or about 72% of its all-time high from $69,000.
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Source: Crypto News Deutsch