Bitcoin Price Analysis: DXY Falls, US Bond Yields Collapse, M2 Money Supply Increases
Bitcoin prices have been under downward pressure in recent months, moving into a technical bear market after falling 20% from its yearly high. However, there are several key catalysts that could push Bitcoin higher in the coming months.
Currently, Bitcoin is trading at $90,000, up about 15% from its low this month. One of the main factors driving this rally is the decline in US bond yields. The 10-year bond yield has fallen from 4.8% in January to 4.24%, with 30-year and 5-year yields also cooling in recent weeks.
Falling bond yields indicate that the market expects the Federal Reserve to cut interest rates several more times this year, especially after a series of weak economic data from the US. Consumer and business confidence have declined, while the unemployment rate rose to 4.1% in February and non-farm payrolls came in at just 151,000, below expectations.
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In addition to bond yields, the US dollar index (DXY) has also fallen sharply, hitting a low of $103.78 – its lowest level since November. The USD has lost about 7% from its high this year, which usually benefits the price of Bitcoin. When the USD falls, the chance of the Fed cutting interest rates increases, which boosts Bitcoin.
Additionally, the global money supply is expected to increase as major governments like Germany and China increase defense and infrastructure spending. This further strengthens the correlation between Bitcoin and the global M2 money supply, as the chart below shows.
Bitcoin Price Technical Analysis
Bitcoin’s daily price chart shows that the price has stabilized from a low of $78,000 to $90,000 over the past week. Bitcoin remains above the long-term rising trendline, which connects the lows since August last year. Currently, BTC has also broken above the 50-day moving average, while also breaking the weak levels of the Murrey Math Lines.
To confirm the uptrend, Bitcoin needs to break above the strong pillar at $93,750, which coincides with this week’s high. If this level is broken, Bitcoin price is likely to reach $100,000 in the near term.
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