Bitcoin (BTC) plans to reclaim $ 45,000 on October 1 as the US dollar fell after hitting its one-year high. Bitcoin’s close inverse correlation with the greenback last month suggests that a weakening dollar could push BTC price even higher in the coming sessions.
Dollar falls after labor market shock
In detail, the US Dollar Index (DXY), which measures the strength of the greenback against a basket of six foreign currencies, including the euro and pound sterling, hit $ 94.50 on Thursday for the first time since September 28, 2020. Unemployment claims against projections of a decline.
Labor data released Thursday showed the number of jobless claims rose to 362,000 last week, up from 351,000 a week earlier and against economists’ forecast of 333,000. As a result, the number of new applications stayed at around 2.8 million for five consecutive weeks.
For the markets, this could be news that the Federal Reserve could postpone the throttling of its $ 120 billion asset purchase program from November to a later month, keeping interest rates lower and the dollar’s renewed strength temporary.
At the time of this writing, the index was trading at 94.263.
Technical outlook predicts bitcoin higher, dollar lower
The technical data also showed that the greenback is facing the prospect of an imminent correction. For example, independent market analyst TradingShot spotted the dollar index in a megaphone pattern that was about to hit the top to track a correction in the upcoming sessions, as shown in the chart below.
“Based on the 1D Relative Strength Index (RSI), DXY appears to be at the top of the formation, there [it was] on August 15, 2018, “wrote TradingShot.
“DXY is building a strong pullback to the bottom of the megaphone.”
Meanwhile, a recent spurt of sales in the Bitcoin market recently had drawn a falling wedge pattern. In particular, falling wedges occur when price trends downward within a channel made up of two diverging, descending trendlines.
Traditional analysts view the falling wedge pattern as a bullish reversal indicator and find that a break above its upper trendline will move price up the maximum distance between the wedge trendlines.
The maximum height of the structure is about $ 10,000. As a result, Bitcoin price can retest at least $ 50,000 should the wedge breakout play out as intended.
A weaker dollar means stronger bitcoin
On the other hand, the disappointing job report could increase investors’ interim appetite for Bitcoin.
Related: Bitcoin’s sharp drop of $ 50,000 in the context of a stronger dollar, gold correlation shows
Vasja Zupan, president of Matrix Exchange, told Cointelegraph that the dollar’s weakness and depreciation against rising inflation would continue to push investors to put their excess cash into crypto markets. He said:
“In its core statement, Bitcoin has an integrated hedge against inflation and therefore a persistently higher inflation in the USA can only drive it upwards. Hence, the dollar will continue to be lower than Bitcoin’s in the long run.
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