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Bitcoin, Ethereum, and Major Cryptos Fall as Dollar Finally Reverses



Bitcoin, Ethereum, gold, stocks, and nearly every other asset on the planet trades against the almighty dollar. Its role as the global reserve currency is an exhausting one, often showing moments of weakness when times get tough.

In the end, cash always shows why it remains king, and crushes other assets when it finally does reverse. And that is exactly what is playing out across markets right now, prompting investors to cash out quickly back into the dollar. The trend may only just be beginning, but its already dealt a crushing blow to major crypto assets, precious metals, and even stocks are starting to respond. What happens next when the dollar fully recovers?

Dollar’s Decline Comes To Conclusion, Rebound Crushes Crypto, Stocks, and Metals

Everyone loves to hate the dollar because the dollar has long been on top. Compared to the rest of the market, Bitcoin and crypto is the clear underdog that could someday claim the throne. But for now, USD will continue to reign supreme.

The dollar’s debasement is very real but will happen much more slowly than people think. Analysts have been quick to denounce its dominance as dwindling, but its demise has been overstated. Sentiment has also reached extreme negatives that often prompted a bounce in the past.

That rebound has begun, and technical analysis on the DXY Dollar Currency Index makes it clear as day. The index of the dollar against a basket of other leading currencies depicts a falling wedge pattern that is beginning to break out through resistance.

DXY Dollar Currency Index Falling Wedge, Bollinger Bands, Hammer Reversal | Source: TradingView

The weekly candle – which closes Friday afternoon – is currently forming a bullish hammer reversal pattern. Dollar bulls will need to show continuation during the next week’s trading session to solidify the reversal into a recovery rally.

The Bollinger Bands show the mad dash into cash that came on Black Thursday, followed by a sharp reversal back into the bands. The dollar has been on a downtrend since, but after a red candle closed outside and then back into the Bollinger Bands, the index started its reversal.


Typically, after touching the bottom bands, a reversal to the upper band is probable – but only if its price can pass through the mid-BB. This itself is often a signal to take entry as more continuation is likely.

The recent reversal is only starting, and it already started to deal a deadly blow to assets like Bitcoin, Ethereum, gold, silver, and even the stock market.

DXY dollar usd gold xauusd silver xagusd sp500 spx

Inverse DXY Versus Gold, Silver, & S&P500 | Source: TradingView

Why Bitcoin, Ethereum, and Other Major Altcoins Will Fall Harder Than Other Assets

Further continuation could be crushing for the crypto rally of 2020. Major cryptocurrencies like Bitcoin, Ethereum, XRP, and Chainlink have already taken a large hit as soon as the dollar started to reverse.

A further rebound into a full-scale recovery in the dollar could prompt crypto investors currently sitting in enormous profit to begin cashing out.


The crypto market as a whole is up well over 80% for the year. Bitcoin is up over 60%, Ethereum over 100% itself. Gold and silver aren’t too far behind with 27% and 49% returns on the year, respectively.

dxy dollar crypto bitcoin ethereum btcusd ethusd chainlink xrp

Inverse DXY Versus Gold, Silver, & S&P500 | Source: TradingView

But all of this stands to be cut down to a lot less, and fast, thanks to the dollar. The DXY index may be weighted against other currencies, but the dollar itself is tied to just about every asset that exists.

The inverse DXY chart, along with a comparison against major crypto assets, shows an uncanny resemblance, and just how powerful the dollar’s impact on these assets has been.

Until that changes, the dollar’s role is likely to remain unchallenged, even by Bitcoin, gold, Ethereum, or other crypto assets.

Featured image from Deposit Photos.

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Bitcoin derivatives data shows pro traders ignored today’s $41K pump




Sometimes all Bitcoin (BTC) needs to pump 10% is a positive remark from someone like Elon Musk.

The Tesla CEO has been pointed to as the culprit for the recent downturn after the company’s May 12 announcement explaining that it would no longer accept Bitcoin payments due to environmental concerns. Musk followed up by saying that he was looking into other cryptocurrencies that required 99% less energy consumption. 

However, on June 13, the situation reversed as Musk reassured the public that Tesla did not sell any additional Bitcoin. The post also said that the electric-car producer would resume taking BTC payments as soon as its Bitcoin mining relied on a minimum of 50% clean energy.

In bear markets, top traders act with caution

While retail investors and algorithmic trading bots jump into action as soon as bullish or bearish signals and news flash, top traders tend to act more with more caution. Those who have been around the crypto markets long enough know that positive news might end up being ignored or severely downplayed in bear markets.

On the other hand, even potentially negative news seems to have little to no impact during bull runs. For example, on Sept. 26, 2020, Kucoin was hacked for $150 million. The following week, on Oct. 1, the United States Commodity Futures Trading Commission charged BitMEX for operating an unregistered trading platform and violating Anti-Money Laundering regulations.

Two weeks later, police reportedly questioned the founder of OKEx, forcing the exchange to suspend crypto withdrawals. Had this series of negative news happened while Bitcoin was flat or in a bearish phase, the price would have undoubtedly have stalled during a bear market.

Bitcoin price at Coinbase in USD, Sept. 2020. Source: TradingView

As shown above, Bitcoin barely had any negative impact in late September and October 2020. In fact, by the end of November 2020, Bitcoin was up 74% in two months. This is the main reason why top traders tend to ignore positive news during bear markets and vice-versa.

The 3-month futures premium is neutral

A futures contract seller will usually demand a price premium to regular spot exchanges. This situation is not exclusive to crypto markets and happens in every derivatives market because in addition to the exchange liquidity risk, the seller is postponing settlement and this results in a higher price.

The 3-month futures premium (basis rate) usually trades at a 5% to 15% annualized premium in healthy markets. When futures are trading below the regular spot exchange price, it signals a short-term bearish sentiment.

Huobi 3-month Bitcoin futures basis. Source: Skew

As shown above, the future basis has been below 11% since May 20 and flirting with bearish territory on multiple occasions as it tested 5%. The current level indicates a neutral position from top traders.

The options skew is no longer signaling fear

The 25% delta skew compares similar call (buy) and put (sell) options side-by-side. It will turn positive when the protective put options premium is higher than similar risk call options.

The opposite holds when market makers are bullish and this causes the 25% delta skew indicator to enter the negative range.

Deribit Bitcoin options 25% delta skew. Source:

The above chart confirms that top traders, including arbitrage desks and market markers, are currently uncomfortable with Bitcoin price as the neutral-to-bearish put options premium is higher. However, the current 7% positive skew is far from the 20% exaggerated fear seen in late May.

Derivatives markets show no evidence of top traders getting excited about the recent $40,000 hike. On the bright side, there is room for leverage buyers to mount positions. Stronger upswings usually occur when investors are least expecting, and the current scenario seems to be a perfect example.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risk, you should conduct your own research when making a decision.