In latest discussions surrounding Bitcoin (BTC) and its potential future worth trajectory, crypto-enthusiasts and analysts alike are discovering new correlations to dissect. Most notably, a correlation with the EURUSD pair (the euro towards the US greenback) has come into the highlight on account of a Twitter thread by esteemed analyst Josh Olszewicz.
Olszewicz begins by setting the stage, drawing consideration to the broadly acknowledged inverse correlation between Bitcoin and the DXY (US Dollar Index). He notes, “Most are aware of the strong historic BTC-DXY inverse correlation. DXY is a USD index against a basket of currencies which has a EURUSD weighting of around 58%. So the BTC-EURUSD correlation should also be relatively high.”
Will Bitcoin Price Follow EURUSD?
What’s intriguing right here is the statement Olszewicz makes concerning the BTC-EURUSD correlation within the interval following the pandemic and the final Bitcoin halving. He mentions that the “post-pandemic (post-halving) EURUSD pair has led BTC in both the bullish and bearish direction by anywhere from a month to a full year.”
This sample, if it continues to persist, would possibly spell some bearish tendencies for Bitcoin. Olszewicz goes on to counsel that, “If this relationship continues to hold, BTC should break down towards the BTFP low of $20k.” This assertion is a big one, indicating a possible substantial drop from its present place, all primarily based on the motion patterns of the EURUSD.
Further supporting this projection, he highlights a technical sample noticed in each BTC and EURUSD, stating, “the EURUSD has completed a bearish H&S, similar to BTC, providing technical fuel for further downside.” A ‘bearish H&S’ refers back to the bearish ‘head and shoulders’ sample, a chart formation that predicts a bullish-to-bearish pattern reversal.
However, it’s not all gloom and doom. Olszewicz does present a glimmer of hope for Bitcoin bulls. He posits, “If you’re bullish on BTC here, you’re either hoping this relationship weakens/breaks, or the EURUSD begins to strengthen instead of continuing to weaken.”
BTC’s Second High Does Not Fit
Olszewicz additionally touches upon some “tin foil” speculations, discussing how the BTC-EURUSD correlation had been seemingly disrupted throughout Bitcoin’s second excessive in November 2022. He means that the continued fall of EURUSD didn’t instantly impression Bitcoin’s bullish pattern, speculating that actions from main crypto gamers like 3AC, FTX/Alameda, and the Anchor BTC reserve may need performed a job.
He states, “It is both possible and likely that the funny business behind the scenes by 3AC & FTX/Alameda, as well as the Anchor BTC reserve, helped delay the inevitable bearish trend by about a year.”
While correlations can present perception, they’re on no account a assure of future market actions. Investors ought to train warning and conduct their very own analysis when making funding selections. Rose Premium Signals added, “interesting observation about the BTC-EURUSD correlation. It’s essential to consider multiple factors in crypto analysis. The relationship could indeed evolve, impacting BTC’s future movements.”
At press time, BTC stood at $26,180.
Featured picture from iStock, chart from TradingView.com
