Is a Bull Run for Bitcoin (BTC) and a Bear Run for the Dollar (DXY) Imminent? Bank of America Reveals!
The DXY, which is seen as one of the bullish signals for Bitcoin (BTC), is also falling along with Bitcoin.
At this point, investors are more pessimistic than ever about the US dollar.
According to Coindesk, Bank of America (BofA) recently released survey results showing that its dollar positions are at their lowest level since early 2012.
A dollar position is an indicator of whether investors expect the dollar to strengthen or weaken. A low dollar position suggests that many investors are reducing or selling their positions in anticipation of a decline (weakening) in the dollar’s value, rather than buying and holding dollars.
At this point, BofA noted that historically, a weaker dollar has been a bullish signal for risky assets like Bitcoin, with a weakening dollar generally increasing appetite for risky assets, which could create a favorable environment for Bitcoin.
Since its launch, Bitcoin has mostly moved in the opposite direction of the US Dollar Index. When the dollar weakened, BTC rose, and when it rose, it fell. Therefore, if history repeats itself, a record-breaking dollar drop could be a classic historical bull run for Bitcoin.
However, analysts note a recent shift in the Bitcoin-dollar dynamic. Lately, both Bitcoin and the dollar have moved in the same direction and lost value.
InvestingLive Asia-Pacific Chief Currency Analyst Eamonn Sheridan stated that if bearish dollar bets intensify and an unexpected rebound occurs, a short squeeze could emerge, sharply boosting the dollar, and added that “in this scenario, Bitcoin’s volatility could also increase.”
*This is not investment advice.
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