The US dollar starts to weaken again as sellers push the US dollar index (DXY) down, which could strengthen the momentum of Bitcoin (BTC) in the short term.
Alternative assets such as Bitcoin and gold are priced against the dollar. So, when the DXY starts to fall, it causes BTC to pick up against the dollar often.
Dollar’s share in world reserves declines rapidly
According to Holger Zschaepitz, a market analyst at Welt, the US dollar’s share of world reserves is declining rapidly as countries such as Russia pursue a de-dollarization strategy and choose gold.
When the pandemic was declared in the first quarter of 2020, demand for the dollar increased as investors fled for cash because it is the global reserve currency.
However, due to various factors, including the presidential election and the negative outlook on COVID last year, the dollar struggled to outperform other currencies such as the Japanese yen and the Swiss franc.
Zschaepitz said:
“OOPS! Dollar declines. While Dollar’s share of world reserves initially increased with the onset of the pandemic, it has declined since then and now stands at just 59% – down 1.5 percent QoQ and the lowest since 1995. “Part of the decline is due to depreciation, but also due to active dollar sales.”
If the fall of the US dollar continues, the probability is high that Bitcoin will continue to rise in April.
Historically, April has been a strong month for Bitcoin for the past ten years, and it has recorded positive gains for five consecutive years.
April is a good month for # Bitcoin
pic.twitter.com/3csQMSdcaABitcoin Archive (@BTC_Archive) March 29, 2021
In addition, Danny Scott, CEO of Bitcoin exchange CoinCorner, said that the average Bitcoin law in April was $ 83,000. He wrote:
“The average law gives #Bitcoin a price target of $ 83,000 for April. On average over ten years in April + 51%.”
Miners seem to pick up Bitcoin
In addition to the favorable macro factors for Bitcoin, Lex Moskoviski, the CIO of Moskoviski Capital, noted that miners have recently started increasing their BTC holdings.
In one day, miners added 4,380 Bitcoin, which the quantitative trader and investor described as a growing trend. He said:
“Miners have really started to increase their positions. 4494 #Bitcoin is being summed up today. Another 4,380 #Bitcoin stacked by miners yesterday. It does look like a trend indeed.”
When miners sell their shares, Bitcoin usually sees a downturn, as it can cause large heavy leverage orders in the futures market that result in liquidations.
If miners stockpile Bitcoin and stack BTC with the expectations that the cryptocurrency will appreciate, it reduces the likelihood of a serious sell-off in the foreseeable future.
In the short term, it remains the key whether Bitcoin stays above the $ 58,000 support area. If it consolidates further, it’s likely to see a strong breakthrough above the $ 60,000 resistance level.