Why a Bitcoin ETF approval would be a big deal

July 7, 2023 Coin Telegraph

Bitcoin ETFs are back in the spotlight after several companies filed with the SEC. This week’s episode of Market Talks discusses why approval would be a big deal for Bitcoin.

In this week’s episode of Market Talks, Cointelegraph welcomes Natalie Brunell, a podcast host, educator and media commentator in the Bitcoin space. Her podcast, Coin Stories, consistently ranks among the top 50 to 100 on Apple podcasts. She has over 300,000 Twitter followers, and is an award-winning TV journalist and former investigative reporter.

Brunell explains how Bitcoin (BTC) is a tool for the financial empowerment of billions of people worldwide and how the depreciating United States dollar is stripping away people’s economic dignity.

The elephant in the room when discussing Bitcoin with someone new to the crypto space is its volatility and risk factor. Brunell describes how to overcome this, and how to explain that Bitcoin might be better than traditional assets, including stocks and real estate.

Brunell offers her take on institutions turning back toward crypto amid multiple spot Bitcoin exchange-traded fund (ETF) filings — despite their love/hate relationship with the sector. Brunell wonders if institutions just want a piece of the pie now that crypto is being taken seriously as an asset class. She also gives her sense of how people feel about the Bitcoin ETF, and why the U.S. Securities and Exchange Commission might lean toward approval.

Brunell talks about her roots and backstory, describing what it was like growing up under communism, and how her parent’s struggles motivated her to search for something like Bitcoin long before it existed.

For aspiring content creators, Brunell explains how she found success doing it. She also gave tips on making a name for yourself and finding your voice in the crowded content creation space.

Market Talks airs every Thursday, featuring interviews with some of the most influential and inspiring people from the crypto and blockchain industry. So, head over to the Cointelegraph Markets & Research YouTube page, smash those “Like” and “Subscribe” buttons for all future videos and updates, and check out the conversation with Brunell.

BRICS Has ‘Ambition’ To Create New Global Currency and Challenge US Dollar in Medium to Long-Term, Says Official

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Can Bitcoin repeat a 2017-like rally as dollar correlation reverses?

July 5, 2023 Coin Telegraph

Bitcoin

The Dollar Index disconnect from Bitcoin does not necessarily mean that BTC price is about to experience a big rally, historic data suggests.

There is a common belief that when the U.S. dollar declines relative to other main global currencies, as measured by the Dollar Strength Index (DXY), the impact on Bitcoin (BTC) is positive, and vice versa.

For instance, the DXY index dropped from 103.0 on Jan. 2017 to a 92.6 low on Aug. 2017, while Bitcoin rallied from $1,000 to $4,930 in the same period. But is there enough evidence to justify a bull run similar to 2016–17, as some analysts are arguing?

But is there enough evidence to justify a bull run similar to 2016–2017, as some analysts are arguing?

Is the Bitcoin-dollar inverse trend real?

Traders and influencers frequently warn about this negative correlation and how a reversal of DXY will likely push the Bitcoin price higher.

Investment research @GameofTrades_ recently posted a chart presenting the pattern in early 2023 and then repeating itself later in May. There’s some indisputable evidence of the inverse correlation there.

Bitcoin and DXY have maintained a negative correlation year-to-date in 2023 pic.twitter.com/VTePX3PNs6
— Game of Trades (@GameofTrades_) June 22, 2023

Moreover, technical analyst el_crypto_prof presents a bearish "Gaussian Channel" change on the DXY chart, which, according to the analysis, matched two previous bull runs for Bitcoin and altcoins in 2016–17 and 2020–21.

#Bitcoin

The DXY (US Dollar Index) has changed the color from green to red on the Gaussian Channel.

The last two times this happened, $BTC and Altcoins experienced a bullrun (parabola) in the following months (2016-2017 and 2020-2021).

Sounds exciting, doesn't it? pic.twitter.com/kHJeM6iZDH
— ⓗ (@el_crypto_prof) June 26, 2023

BTC-DXY correlation varies with time

The seemingly inverse relationship between Bitcoin and DXY have never lasted more than 7 weeks. The correlation indicator runs from -100%, indicating that certain markets move in opposite ways, to 100%, indicating that the movement is in lockstep; 0 represents a total lack of correlation between the two assets.

*Dollar Index DXY 20-day correlation versus Bitcoin. Source: TradingView*

The metric has been negative for 81% of the past 670 days, indicating that DXY and Bitcoin have generally followed an inverse trend. Still, that’s not how the correlation metric works, because readings between 0% and -50% denote a lack of correlation.

In fact, the longest-ever period of a correlation lower than -50% has been the 47 days starting on Aug. 18, 2022. Therefore, saying that Bitcoin has an inverse correlation to the DXY index would be statistically incoherent since it was -50% or lower for less than a third of the days since September 2021.

Between June 2021 and November 2021, the DXY and BTC price presented a very similar pattern as both rallied during that five-month period.

Events solely relevant to the cryptocurrency might have distorted the metric, however, such as the first U.S. Bitcoin futures exchange-traded fund launch on October 19, 2021.

*Dollar Index DXY (orange, left) vs. Bitcoin (blue), 2021. Source: TradingView*

But regardless of the rationale behind the move, correlation is not causation, meaning it is impossible to conclude that DXY’s positive performance affected Bitcoin price during the period.

Longer-term analysis still required for DXY

Even though analysts and market influencers frequently use 20-day correlation data to explain daily price fluctuations, a longer time frame is required to comprehend any potential, if any, effects of DXY on Bitcoin's price.

For instance, when the U.S. Federal Reserve injects trillion-dollar stimulus packages into the economy, odds are the impact on inflation and global currency flows will take a couple of weeks. After all, not every family, business, and financial institution will put the money in circulation right away.

But the price signals on the Bitcoin market are more immediate as coins are traded 24/7. So the price movements are extremely susceptible to news, macroeconomic data, and geopolitical events, with reverberating effects for weeks and even months.

A perfect example can be demonstrated by Bitcoin’s 38% loss in nine days on June 8, 2022.

*Dollar Index DXY (orange, left) vs. Bitcoin (blue), 2022. Source: TradingView*

Notice how it took almost 4 months for the DXY index to move from 102.50 to the 114.2 peak by late Sept. 2022, even though Bitcoin had already bottomed at $18,900 long before that.

DXY a poor proxy for BTC price

In other words, those betting on the DXY index reversal preceding a BTC price rally have no statistical support given that the correlation varies over time.

Moreover, even when the inverse correlation happens, there may be a gap between Bitcoin's immediate price action and the longer term trends of the Dollar Strength Index.

Whenever favorable (or unfavorable) developments in the cryptocurrency industry occur, the historical correlation becomes irrelevant. That might have been the case impacting the recent Bitcoin gains, which can't be directly attributed to the supposed "Gaussian Channel" reversion on the DXY chart.

Ultimately, cherry-picking two or three instances of DXY index inverse correlation happening while a cryptocurrency bull run occurred in the past is not enough to call a bull run similar to 2016–17, considering the multiple instances of positive correlation and gaps between both assets' price action.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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Why is Cardano price down today?

June 19, 2023 Coin Telegraph

ADA price

Cardano’s price is down today, continuing its decline for a fourth week in a row amid rate hike fears, an SEC crackdown and a recovering U.S. dollar.

The price of Cardano (ADA) is down over 3% on June 19 after dropping over 30% in the past two weeks. Is ADA’s price heading for its fourth red weekly candle in a row?

No respite for Cardano price bulls

On June 19, ADA’s price fell over 3% to daily lows of $0.257 as traders continued to assess Cardano’s mention in the list of crypto assets that the U.S. Securities and Exchange Commission considers “unregistered securities.”

*ADA/USD daily price chart. Source: TradingView*

In addition, Federal Reserve’s hawkish guidance last week didn’t help ADA price either, with another 50 basis points hike now likely in 2023. Higher rates typically decrease investors’ appetite for risk assets, such as Cardano.

Meanwhile, open interest in ADA-linked derivatives has dropped to around $111 million, the lowest since January 2021.

*ADA open interest performance. Source: Coinglass*

The past 24 hours have witnessed liquidations worth around $360,000, with long positions losing the most at $341,320. In other words, more bullish traders have closed their positions by selling ADA, which likely added to the downward pressure on June 19.

Furthermore, ADA’s intraday price decline on June 19 coincided with the 0.15% rise in the U.S. Dollar Index (DXY). These inverse moves may break their daily positive correlation coefficient in the coming days from the current yearly high of 0.82.

*DXY daily performance chart. Source: TradingView*

In other words, ADA may keep declining if the dollar rises in June, now that the latter has entered the rebound stage inside its prevailing symmetrical triangle pattern.

ADA bullish vs. bearish scenarios

Bullish Cardano traders showed resilience to the SEC crackdown two weeks ago, confirmed by a bullish rejection candlestick on June 5.

ADA’s price has risen more than 15% since but remains “oversold” with the daily relative strength index (RSI) below 30.

These technical indicators hint at a possible extended ADA consolidation or recovery period ahead.

Moreover, a descending triangle can come into play if this bullish scenario plays out. This up-move will present a target of $0.30 over the next few weeks, up 16.5% from the current price levels.

Conversely, a descending triangle breakdown scenario will likely result in a 12% decline toward $0.226 — a potentially significant area of support — in the next few weeks.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.