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This week the US Dollar Index (DXY) has recorded one of the largest three -day negative performance in recent history. Since Monday, the DXY -5.4%has fallen from 109,881 to 103,967 -an event that some market observers interpret as a bullish bentcoin for Bitcoin. Jamie Coutts, Chief Crypto analyst at Real Vision, has attracted himself by historical comparisons to claim that the steep Dxy reduction could be a considerable revival in the world in the world in the world through market capitalization.
Dxy’s historic drop signals a large bitcoin rally
Couts presented The findings of two historical back tests on X, which describes how similar DXY drops are merged with crucial moments in the Bitcoin price cycles. He wrote: “When viewing this recent step in the DXY through a historic lens, it is a challenge to be anything but bullish. I ran a signal screen for 3 -day negative movements of more than -2% and -2.5% and discovered that they all took place at Bitcoin -hole market troughs (bending points) or mid -cycle bullmarkts (trend continuations). “Although the statistical significance is limited by the relatively short trade history of Bitcoin, Coutts underlined that these data points are still worth considering.
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In his first back test about DXY, from more than -2.5%, Coutts found such a scenario since 2013 at eight times. Over a period of 90 days after those decreases, Bitcoin rose every time, giving it a perfect 100% win rate. The average return was +37%, which would translate into an estimated BTC price of around $ 123,000, while a movement of one standard deviation achieved above that average +63% (around $ 146,000 BTC). Even in the worst case, Bitcoin still managed to win 14%, making it around $ 102,000 BTC.
In his second back test aimed at DXY fall of more than -2.0%, there were 18 such events since 2013, and Bitcoin rose 17 of those 18 times for a profit percentage of 94%. The average return of 90 days was +31.6%, almost $ 118,000 BTC, while a standard deviation movement was +57.8% (around $ 141,000 BTC). The worst return of 90 days after such a DXY fall was -14.6% (around $ 76,500 BTC).
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Recognition that these back tests cannot offer any guarantees, Coutts stated: “I made a daring call about new highlights in May yesterday. I try to base projections on robust data points. OFC can be different this time. Let’s look. “
Analysts often consider falling DXY as a sign of improving risky appetite on worldwide markets, which can promote alternative stores of value and risk provisions, including Bitcoin and other cryptocurrencies. The abrupt retreat of the US Dollar Index is the heels of regulatory worries and a challenging February for Bitcoin, but Coutts claims that the larger trend seems remarkable of historical revival points.
He also noticed in a post from the previous day: “Do not think that people understand the meaning of the DXY movement in the past 3 days and what it means for Bitcoin. […] The DXY saw its 4th largest negative 3-day movement-massal liquidity positive. Just as Bitcoin squeezed and had the worst February in a decade. In the meantime, the Top 200 Crypto index has poured again in Altcoin Land. The graph shows that 365 days of new lows were 47%, a characteristic of capitulation in a bull’s cycle. The stage is set for a new highest high high in Bitcoin and top 200 aggregated market capitalization by May. “
At the time of the press, BTC traded at $ 88,404.
Featured image made with dall.e, graph of tradingview.com