Reasons Behind The Bitcoin Price Rally – Is It Sustainable?

Following the Bitcoin price’s extreme loss of volatility over the past few weeks, yesterday’s rally feels like new hopium and a massive move to the upside. For the first time in three weeks, the price has surpassed $20,000 with the move coming as a surprise to many. Most recently, inflation fears and macroeconomic uncertainties have dominated the crypto market. Fundamental changes in this regard did not occur yesterday. So what was the reason for yesterday’s upswing in the Bitcoin market? Related Reading: Bitcoin Volatility Shrinks To All-Time Lows – What To Expect What is apparent is that the stock market also rose yesterday, as Microsoft and Google, among others, announced earnings. However, whether this was enough to revive Bitcoin’s volatility is questionable. A better explanation might be the Dollar Index (DXY). When the DXY began to loose its ground between 8 and 10 a.m. EDT, Bitcoin’s price surged shortly thereafter. The DXY dropped from 112.072 to 110.846 points within those two hours. During the same time, the Bitcoin price showed initial strength, which then extended into a further rally. This phenomenon is not new. For much of 2022, Bitcoin and the dollar index were strongly correlated in an inverse relationship, i.e., while the DXY was rising, BTC was falling. While the correlation has declined again in recent weeks, yesterday’s move may suggest a resumption of the correlation. W...