Jamie Coutts, Real Vision’s chief crypto analyst, says one indicator, which has often preceded Bitcoin price gains in the Q2-Q3 period of the year, could soon turn green. This is the dollar index (DXY), which measures the strength of the US dollar against a basket of other currencies.

But what is the signal we should be waiting for for a summer Bitcoin surge?

Is Bitcoin’s Summer Rise Coming?

The rate of the US dollar is generally inversely correlated with the prices of risk assets. That simply means that most financial assets rise when the US dollar falls.

According to Coutts, every summer surge in Bitcoin so far has been preceded by weakness in the US dollar.

“If there is one indicator to watch for this theory, it is the US dollar. Every summer Bitcoin surge has been preceded by a strong dollar, followed by a collapse, which then sends the Bitcoin price higher,” Coutts said.

US Dollar versus Bitcoin. Bron: Jamie Coutts/Twitter

Currently, the dollar is in a long period of consolidation and if the DXY breaks below 101, he believes it could trigger a huge rally for Bitcoin.

But there is also a risk for Bitcoin

However, there are also risks for Bitcoin. For example, the DXY could break above 107-108. That could cause another massive drop for risk assets, including Bitcoin, according to Jamie Coutts.

It is therefore important that the US dollar weakens. This could be done by rapid interest rate cuts by the US central bank, which does not seem to be happening at the moment due to high inflation and the strong US economy.

What could cause a weak dollar is more attention to the apparently unaffordable US national debt. The longer interest rates remain at this elevated level, the faster interest costs for America will rise, driving up budget deficits, further increasing debt, and thus driving up interest costs again.

That would be a painful scenario for the US dollar, although it remains to be seen to what extent it could cause a fall in the world reserve currency before the summer. This is more of a scenario for the slightly longer term.

Although there are more and more investors who are already preparing for this scenario and, for example, hiding in gold.

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Source: https://newsbit.nl/analist-bitcoin-koers-van-150-000-als-deze-indicator-op-groen-springt/

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