Bitcoin the weekend sell-off may not have much to do with crypto-specific factors, but rather the US dollar.
After what has become a typical weekend crypto price decline, bitcoin was actually higher throughout the week, in part as the decline in the U.S. dollar accelerated.
Bitcoin peaked for the week Wednesday afternoon at just under $91,000 as the Fed held rates steady and attention turned to who President Trump might appoint as the next leader of the U.S. central bank.
The spike coincided with a decline in the Dollar Index (DXY) to a multi-year low of 95.34. All things being equal, a weaker U.S. dollar is often seen as supportive for asset prices, such as bitcoin, stocks, and commodities.
Even though technicians sounded the alarm that DXY below 96 meant even deeper declines for the greenback, 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 on Thursday, with bitcoin’s losses accelerating throughout the session. Finally, Thursday night’s leak that Kevin Warsh (and his hawkish reputation) was to be named Fed chairman forced a further rise in the dollar and a decline in the spread for bitcoin, with BTC ultimately bottoming at $81,000.
Since then, Bitcoin has managed to rebound all the way to $83,000, but the dollar has continued to post gains, raising questions about the sustainability of the crypto’s rise.
