Bitcoin (BTC) may see a price boost this week as the U.S. dollar currency index (DXY) weakens and one analyst tells American voters to buy.
Data showed DXY dropping for a fourth day on Oct. 1, as negotiations over a new coronavirus stimulus deal continued in Washington.
Vays: “Buy Bitcoin” no matter who wins the U.S. election
DXY and BTC/USD have demonstrated a strong inverse correlation in recent months. Recent DXY gains did not translate into intense selling pressure for Bitcoin, but fresh losses could yet buoy BTC bulls in the long term.
The U-turn in DXY’s fortunes comes as the United States Senate attempts to thrash out a new deal on coronavirus aid which could come with a $2.5 trillion price tag.
Speaking to FOX Business on Wednesday, Treasury Secretary Steven Mnuchin confirmed that talks were ongoing, but that any deal would include a fresh round of $1,200 stimulus checks for eligible U.S. citizens.
“The good news is we’ve reached an agreement that if there is a deal, there are direct payments similar to last time that are in the package,” he said.
Mnuchin was speaking a day after a heated debate between President Donald Trump and presidential hopeful Joe Biden.
As tensions flared, popular trader Tone Vays sought to get viewers’ attention online by arguing that no matter who takes over control of the White House, money printing, like that which finances stimulus packages, would continue to hurt the dollar.
“No matter who wins they will keep printing so BUY BITCOIN,” Vays wrote in a live chat as the debate aired.
U.S. dollar currency index 3-month chart. Source: TradingView
Bitcoin DXY correlation halts decline
The past days’ retreat has meanwhile begun to alter the correlation between DXY and Bitcoin, data reveals.
Compiled by analytics resource Digital Assets Data, a comparison of Bitcoin 90-day returns correlations to DXY, gold, VIX and the S&P 500 shows DXY bottoming out at the end of September.
Bitcoin 90-day returns correlations comparison. Source: Digital Assets Data
By contrast, BTC/USD remains highly correlated with both gold and the S&P 500 into October as the price of Bitcoin recorded its second-best quarter in history, closing the month above $10,600.
As Cointelegraph reported, however, not everyone believes that the situation will last; Bitcoin should soon break away from traditional markets altogether.