Bitcoin to $100K possible as key dollar fractal suggests yearend declines

Bitcoin to $100K possible as key dollar fractal suggests yearend declines
image from medium.com

Key Takeaways:

  • Performance analysis claims December is historically bearish for the US dollar.
  • Bitcoin, as a safe-haven asset could benefit form the weakening greenback.
  • The $100,000 price target is not likely to happen in Q4 2021, but still stands for Q1 2022.

YEREVAN (CoinChapter.com) – Inflation data via the consumer price index (CPI) is expected to come in this week, possibly hitting 4.9% year-over-year. Thus, retail investors worldwide seek alternative ways to hedge their savings from the inflationary pressures arising from the mainstream financial system.

For example, gold and the equity market shared their inflation safe-haven status with Bitcoin during the pandemic, as many investors turned to the flagship cryptocurrency to safeguard their funds.

However, the Fed implemented its tapering policy in October to keep the rising inflation at bay. As a result, the governmental agency pinpointed June 2022 as the ETA on the policy. Moreover, Atlanta Fed President Raphael Bostic asserted that a sooner bond-buying would benefit the economy and targeted March 2022 as the preferable time frame.

Following the Fed’s hawkish policy, Bitcoin’s 26% plunge over the previous month appeared against a stronger U.S. dollar, as the greenback’s currency index (DXY) grew 2.34%. In hindsight, the DXY reflects the strength of the U.S. dollar against the basket of leading currencies worldwide: Euro, Swiss Franc, Japanese Yen, Canadian dollar, British pound, and Swedish Krona.

U.S. dollar weakening?

Nonetheless, the U.S. dollar seasonality analysis over the past five and ten years shows a consistently bearish December for the greenback. The data trailed 5-year and 10-year performances and included the Financial Crisis of 2008/2009, with quantitative easing policies in place.

Seasonal performance summary. Source: dailyfx.com
Seasonal performance summary. Source: dailyfx.com
Also read: Bitcoin week ahead Ep20: BTC calm near $50K ahead of CPI data

As the global economy faced similar challenges in the Coronavirus Pandemic and the upcoming Omicron variant FUD, the data could be relevant for the current market climate. As the chart above demonstrates, the most prominent historical contrast of performances in December occurred between the dollar and gold.

The yellow metal has been the prime safe-haven asset throughout centuries. However, since Bitcoin stepped on the stage, the weakening USD performance in December could also benefit the alpha crypto.

What does it mean for Bitcoin?

The BTC and DXY combination chart below shows an erratic inverse correlation between Bitcoin and the U.S. dollar. When USD is strongest, BTC price tends to floor. The opposite is not a given. However, with the historically bearish December for the world’s reserve currency, Bitcoin could seize the chance to reach the $100,000 prediction.

Bitcoin vs. US dollar index. Source: shibrain on TradingView.com
Bitcoin vs. U.S. dollar index. Source: shibrain on TradingView.com

In hindsight, the $100-thousand price target for Bitcoin has been circling the crypto community for some time. As CoinChapter reported in late October, the technical analysis indicated a setup that could take BTC to $100,000 after dropping back to $50,000. The pattern was still in progress in early December.

Moreover, several experts backed the objective. For example, Meltem Demirors, the Chief Strategy Officer of the leading digital asset manager Coinshares, saw Bitcoin more than doubling in price in Q4 2021. So even though the prediction is not likely to pan out this month, the outlook could be relevant for Q1 2022.

Matt Hougan, the chief investment officer of asset management firm Bitwise, backed the opinion.

$100,000 by the end of the year is a difficult prediction to make […] I think $100,000 could be in target in 2022 but this year, I’m not so sure.

said the executive.
Also read: Bitcoin(BTC), Ethereum(ETH) sideline hawkish Fed to maintain bullish course.

The Fed’s hawkish policy raised the DXY by 2.34%. However, the data shows USD could lose momentum in December. Based on the erratic inverse correlation between Bitcoin and the greenback, the former could make headway before the year’s end. Reaching $100,000 might not be a given, but a bullish rally is likely.

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Bitcoin, Bitcoin to $100K possible as key dollar fractal suggests yearend declines

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