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Bitfinex analysts predict Bitcoin surge as Dollar Index dips

Bitcoin poised for growth amid dollar's decline and market uncertainty.

Bitfinex analysts predict Bitcoin surge as Dollar Index dips

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The Dollar Index (DXY) is down 1.1% since its 6-month peak registered on May 1st, and this is a sign of a very bullish 2024 second half for Bitcoin (BTC), according to Bitfinex analysts. Bitcoin and DXY have a notorious inverse correlation, which means that pullbacks in the Dollar Index are met by BTC growth.

After the Federal Open Market Committee (FOMC) meeting last week, the DXY crashed 1.85% until May 3, when it started a recovery movement to the current 105.32 level seen at the time of writing. This was caused by the dovish stance announced by the FOMC, meaning that the Committee is inclined to cut interest rates.

“Non-Farms Payroll data within the same week, signaled a weaker job market further accelerating the decline in the dollar while also propelling a move higher across all risk assets including Bitcoin and the US equities market,” explained Bitfinex analysts.

The weaker-than-expected job data may lead to concerns about an economic slowdown, which can increase the likelihood of interest rate cuts by the Federal Reserve. “Lower interest rates or the expectation of rate cuts can diminish the yield on investments in US dollars, making the dollar less attractive and potentially weakening the DXY.”

As the landscape becomes favorable to a weakening of the dollar, Bitcoin might get stronger in the next months, and Bitfinex analysts see a “very bullish” scenario for Q3 and Q4. “However, we expect the market to remain uncertain over the short-term in a low volatility environment till the actual tapering of QT [quantitative tightening] takes place in June.”

Moreover, trader Rekt Capital also shares the vision of an uncertain short-term, pointing out that Bitcoin is undergoing a post-halving accumulation phase commonly seen in past cycles. He shares that Bitcoin will retrace deep enough to convince investors that the bull cycle is over, before resuming its uptrend.

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