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Investors looking for clues on bitcoin’s recent failure to cheer continued accumulation by the Luna Foundation Guard (LFG) may want to look at the ever-growing list of macro risks and what’s happening in traditional markets.
The world’s largest cryptocurrency fell under $42,000 during European hours, hitting the lowest level since March 22 and extending the decline from the late March high of $48,240, according to CoinDesk data. The continued slide came even as LFG added $173 million in bitcoin to its wallet over the weekend, boosting the total holdings to almost 40,000 BTC.
The weakness perhaps stems from traditional investors refusing to follow LFG’s lead, considering the several economic and political uncertainties stalking the risk assets, according to Noelle Acheson, head of market insights at Genesis Global.
“The DXY strength is part of it, but overall it’s more market uncertainty, macro concern and a focus on what rates will do,” Acheson said in a Telegram chat.
The dollar index, which tracks the greenback’s value against majors, tapped two-year highs above 100 early today, taking the year-to-date gain to 4.3%, according to data provided by charting platform TradingView. The global reserve currency has risen 1.5% this month.
According to Kevin Kelly, co-founder and global head of macro strategy at Delphi Digital, the greenback and bitcoin have a pretty inverse correlation. “2017 was one of the worst years for the dollar, and that coincided with a huge run in bitcoin,” Kelly said in an analyst call in March. “We saw bitcoin run-up in early 2021. That was on the back of the dollar weakness.”
Griffin Ardern, volatility trader from crypto asset management firm Blofin, said, “when the DXY has reached highs and climbed further, it usually indicates further declines in other assets, whether it is the stock market, cryptocurrencies, or FX.”
That’s true even more so now given the ongoing dollar rally is being fueled by hawkish Federal Reserve officials, calling for a…