Crypto investors worldwide are fighting cut-throat inflation, geopolitical crisis, and the new monetary policies formed by the Federal Reserve. The Fed’s meeting, which was held last week, showed a new plan to combat the growing inflation by shrinking its balance sheet to $95 billion each month.
Nevertheless, the crypto market continues to see volatility. While Bitcoin failed to keep an escalating path, Ethereum followed the same pattern.
Bitcoin was traded at $40,700 today morning with a high value of $41,250 at Asian hours. On Monday, the buyers held a 200-moving average due to a major technical issue. On the contrary, the Dollar index (DXY) saw a two-year high having a gain of 2.5%.
We might see further gains with DXY as a two-year bearish trendline is observed on the charts.
DXY and Crypto Market Inversely Proportional, Says Experts
Analysts at Delphi Digitals mentioned, “as the DXY is seeing soaring high figures of a 100 after crossing two-years high, the crypto market might see more decline in the coming days. The DXY is the biggest hindrance for the market.”
“A greenback effect observed might give rise to the biggest breakout as the EUR and JPY (sub-currencies under DXY) are susceptible to major technical breakdowns. These currencies constitute -70% of the USD,” adding further.
“We have observed several high and low chart trends around Bitcoin in the past years, and what we are fronting today is one of those major movements. While DXY gains momentum, BTC fails to keep its increasing trend, and DXY and BTC are inversely proportional,” remarked another Delphi analyst.
Moreover, Solana, Cardano, and Avalanche — Ethereum’s three leading smart contractors have reached a seven-day loss of nearly 8%. Solana was trading for $102, Cardano for $0.9536, and Avalanche for $77.58. Terra LUNA posted significant losses among the top 30 coins per week, down 15% to $ 81.31.
Ethereum, on the other hand, is trapped between two major contradicting phenomenons occurring currently: Web 3.0 adoption + Institutional adoption and market-correlation + decreasing chain activity. The former scenario is a cyclic dynamic, whereas the latter might prove to be a secular shift.
Despite this bloodbath going on in the crypto market, some experts still believe in the potential of BTC and expect it to touch $100,000 at some point. Bitcoin had an all-time high in November. Meanwhile, Ethereum touched an all-time high with a value of $4,850.
In 2021, Bitcoin hit its first high of the year in April with values of $60,000, and since then, it has observed huge volatility. In July, when the second wave of COVID-19 hit major parts of the world, it dropped to $30,000. Since then, Bitcoin has been swinging wildly up and down.
According to some experts, it is all part of the course, and Bitcoin and other cryptocurrencies will continue to see volatility in the coming future.