An inverse correlation between the crypto market and the DXY has often helped to signal when a bull rally is on the horizon. One of the most notable instances of this happened 9 years ago, and since then, the formation has not returned, until now, signaling a massive price surge in October.
DXY Readies To Clock 12th Consecutive Candles
In an X (formerly Twitter) post, crypto analyst TheCryptoMann has revealed an important formation in the DXY. The DXY is the United States Dollar Index which measures the value of the dollar to other major (6) currencies around the world.
Now, since Bitcoin is often touted as an alternate and better currency to the likes of the US dollar, there is often some competition between them leading to an inverse correlation over the years. This is why this DXY formation is important.
As TheCryptoMann points out, the DXY is headed toward a 12th consecutive green candle which is bullish for the crypto market. This is because the last time that this happened was in 2014, and the results were very bullish for crypto.
The analyst explains that when this happened in 2014, the DXY had fallen 8%. Crypto had then gone in the opposite direction, mounting a rather impressive rally. A look at the chart shows that in the year 2014, the crypto market went from $5.4 billion to over $8.2 billion, an over 50% surge in price.
Total market cap jumps from $5.4 billion to $8.2 billion 2014 | Source: Crypto Total Market Cap on Tradingview.com
A Bullish Time For Crypto
TheCryptoMann likens the current movement to what took place in 2014 and actually expects this movement to repeat once more. As he explains, the incoming correction in the DXY will see the crypto market explode as it did 9 years ago.
He also points out that "the DXY is also being rejected from the 0.5 FIB Retracement level from its most recent local highs and lows!"
He further added:
There is a clear inverse correlation between the DXY and the cryptocurrency market. So over the next month, we're about to see some major price movements, so eyes on the market.
Another analyst Cryptoinsighuk also seems to share the views of TheCryptoMann as he also believes there is correction coming for the DXY. "Also, whilst sentiment is this bad we are having the SBF trial. This is negative towards Crypto, tells me the bottom could be very close in this move," the analyst added.
If TheCryptoMann's forecast is correct, then the crypto market could be getting ready for a massive move to the upside. A similar rally would see the total market cap go from $1.065 trillion currently to over $1.5 trillion, signaling a bullish end to the year 2023.
Featured image from The Motley Fool, chart from Tradingview.com
Source: NewsBTC.com
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