The week in which the U.S. presidency changes sees limp stocks and a rangebound Bitcoin, but what could provide a fresh shake-up?
Bitcoin (BTC) is back in familiar territory as the week begins after a weekend spent ranging in its new, albeit large, trading corridor above $30,000.
With the United States presidential inauguration just days away, Cointelegraph takes a look at what else may be able to shake up BTC price action.
DXY keeps reversing losses
The inauguration of President-elect Joe Biden comes as the strength of the U.S. dollar continues to rebound.
On Monday, the U.S. dollar currency index (DXY), which measures USD relative to a basket of major trading partner currencies, hit its highest level since Dec. 21.
The sustained upside in DXY tends to mean that Bitcoin growth takes a breather, this inverse correlation forming a conspicuous pattern throughout 2020. In the event, BTC/USD had little to lose during the latest gains, the majority of which were preserved despite huge volatility.
DXY was likewise unfazed by Biden’s decision to spend another $1.9 trillion in debt-financed coronavirus support, something that was described last week as “another multi trillion dollar advertisement for Bitcoin” by Gemini exchange co-founder, Tyler Winklevoss.
As Cointelegraph reported, however, analysts still favor dollar weakness to continue in the long term. Even traditional market participants continued to eye the extent of USD supply increases, a move which has shocked many into considering Bitcoin as an alternative store of value.
“A currency market isn’t different from any other market,” William Dinning, chief investment officer of U.K. fund manager Waverton Asset Management, told the Wall Street Journal over the weekend.
“If there’s a lot of potatoes available, it’s going to be cheaper. If there’s a lot of dollars available, it’s going to be weak.”
Nonetheless, incoming Treasury Secretary Janet Biden has said that the U.S. will not deliberately aim to maintain a weak dollar for the benefit of trade advantages.
Stocks need a rest, says analyst
On the markets, stocks showed indecisiveness as the week got underway, having calmed down from Biden’s announcement.
Asia saw mixed performance, and with Wall Street closed for Martin Luther King Jr. day on Monday, U.S. futures were just a tad higher from Friday.
The lackluster gains were curious for some, coming despite the fact that China had delivered Q4 economic growth statistics which dwarfed any expectations. As Bloomberg reported, the world’s second-largest economy grew 6.5% during the quarter, making it the only major economy to avoid a coronavirus contraction last year.
“Markets needed a breather or even a pull back to justify reflationary expectations,” Ben Emons, managing director of global macro strategy at Medley Global Advisors, explained to the publication.
As Cointelegraph reported, Bitcoin continues to outpace any traditional assets in terms of gains in 2021, with correlation trending further and further towards zero for both stocks and safe havens such as precious metals.