Bitcoin sets its sights on 50,000 as the dollar continues to lose steam

Bitcoin (BTC) is looking to recover $ 45,000 as of October 1, taking advantage of the US dollar’s pullback after hitting a one-year high. Bitcoin’s tight inverse correlation to the dollar last month indicates that the weakening of the dollar could push the price of BTC higher in the coming sessions.

Correlation of Bitcoin and dollar on hourly chart. Source: TradingView.com

The dollar falls after the shock of the labor market

The US Dollar Index (DXY), which measures the strength of the dollar against six baskets of foreign currencies, including the euro and the pound, hit $ 94.50 on Thursday for the first time since September 28, 2020. Without However, he withdrew with the news of the rise. After unemployment claims in the US, the decline was seen.

Jobless claims rose 362,000 in the latest data, up from 351,000 a week ago, according to labor force data released Thursday. Economists expected 333,000. As a result, the number of re-shipments remained around 2.8 million for five consecutive weeks.

For markets, this could mean the Fed could delay its $ 120 billion asset purchase program until after November, keeping interest rates low and temporarily keeping the dollar strong.

DXY daily price chart. Source: TradingView.com

The index was trading at 94,263 at the time of this writing.

Technical Structure Predicts Higher Bitcoin, Lower Dollar

Technical data shows that the dollar faces the prospect of a correction. Independent market analyst TradingShot suggested that a correction could be seen in the coming sessions, as shown in the chart below.

Daily price chart of the US dollar index. Source: TradingShot, TradingView.com

TradingShot reports: “Based on the 1-day Relative Strength Index (RSI), the DXY price is August 15, 2018. [olduğu gibi] It seems to be at the top of the formation. “

“DXY could create a strong recoil towards the bottom of the megaphone pattern.”

Meanwhile, the recent selloff in the Bitcoin market has created a descending wedge pattern. This pattern is seen when a channel is formed consisting of two different descending trend lines.

Traditional analysts interpret the falling wedge pattern as an indicator of a bullish reversal. They signal that a breakout above the upper trend line pushes the price up the maximum distance between the wedge lines.

BTC / USD daily price chart with descending wedge pattern. Source: TradingView.com

The maximum height of the structure is approximately $ 10,000. All in all, the Bitcoin price should retest at least $ 50,000 by the end of the breakout.

Weakened Dollar Means Strong Bitcoin

On the other hand, unemployment data may increase investor appetite for Bitcoin.

Relative to: Bitcoin Enters New Month Positively: Heartwarming Predictions From Analysts

Vasja Zupan, director of the Matrix Exchange, told Cointelegraph that as a result of the weak dollar and the devaluation in the face of rising inflation, investors will continue to invest their advantage in the cryptocurrency markets:

“The core value proposition of Bitcoin is to have a built-in hedge against inflation. Therefore, high inflation in the US can only propel BTC upwards. In the long term, the dollar will continue to be worth less than Bitcoin.” .

Opinions and comments expressed here are solely those of the author. It may not reflect the views of Cointelegraph. All investment and trading involves risk. You should do your own research when making a decision.

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