Although the U.S. Dollar Index (DXY) surged to 109.22 — its highest level in over two decades — earlier today, since then it has dropped to 108.60, thereby allowing stocks and crypto to get some badly needed oxygen.
Wikipedia says the U.S. Dollar Index” (DXY)—which is designed, maintained, and published by ICE (Intercontinental Exchange, Inc.)—is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies. These other currencies are EUR, GBP, JPY, CAD, SEK, and CHF.
According to data by MarketWatch, the DXY rally that started on August 11 has taken it from 105.09 to 109.22 (which it hit earlier today), its highest level since June 2002. Stocks, gold, and crypto are thankful that since then DXY has dropped to 108.61 (as of 6:42 p.m. UTC on August 23).
Of course, as crypto analyst Dylan LeClair pointed out today, a surging DXY affects the price of Bitcoin (and other cryptoassets) in the short term and not in the long term:
Regarding Bitcoin’s short-term price action, pseudonymous crypto analyst “Altcoin Sherpa” had this to say:
As for Bitcoin’s long-term prospects, Gabor Gurbacs, who is the director of digital assets strategy at Market Vector Indexes (a wholly-owned subsidiary of global investment manager VanEck), seems to believe that over time will reach at least 50% of that of gold, i.e. get to over $5.7 trillion, which suggests a 13X upside potential:
The main macro factor behind the jitteriness felt by global markets in the past one week is the concern that Fed Chair Powell might sound quite hawkish at this Friday’s speech, which could suggest that in September the Fed will increase interest rates by at least 0.75% in an attempt to control raging inflation in the U.S.
The 2022 Economic Policy Symposium, “Reassessing Constraints on the Economy and Policy,” is being held August 25-27 in Jackson Hole, Wyoming. This annual symposium is hosted by the Federal Reserve Bank of Kansas City, and Fed Chair Powell is one of the attendees.
Robert Cantwell, portfolio manager at Upholdings, told CNBC:
“When you see the market right now dropping down like this, this is the market saying the Fed has to be more aggressive to slow the economy down further if they want to bring inflation back down.“
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