Dollar or bitcoin to win out over next few weeks?

During the current downward trend in equities and cryptocurrencies over past weeks, the dollar has been without doubt the currency that has fared the best. It remains strong against a basket of world currencies and even gold and silver have not performed as well. What could be the outlook for bitcoin against this powerhouse over the next few weeks?

Crazy debasement – but it’s still king

In a recession, the saying goes that “cash is king”. Many wondered if this would still be the case, given that the dollar and all other fiat currencies have increasingly been debased, especially since the Covid pandemic, vastly reducing the purchasing power of the average citizen.

The veritable avalanche of currency that poured into the US economy was always going to have disastrous consequences for the lower and middle classes, in that their wealth will be wiped out by the accelerating debasement caused by the ensuing high levels of inflation.

However, even though the fiat monetary system is fast taking us all towards a dreadful reckoning, for the time being at least, the dollar is still the world’s reserve currency, and as such, remains the medium through which most of the planet conducts its business.

Bitcoin is still not understood by the vast majority of the market, and together with its high volatility it is deemed a high-risk asset. Therefore as these economic times get increasingly uncertain, investors will divest themselves first of what they perceive as their highest risks, and bitcoin will probably fall into that category.

Bucking the trend

So is this going to continue to happen? This is where, at least for the short-term, (arguably long-term, bitcoin will continue to rise) bitcoin may well buck the trend. So why is this?

Bitcoin has been beaten down without any kind of decent rally since the end of March this year. The downwards trend can also be taken back to near the beginning of last November, at which time bitcoin recorded its all-time-high.

Bitcoin is seeing a rally right now, but some might say that it is a dead-cat bounce and that eventually the price will resume its downward impetus. The trend is your friend, right?

All trends have to end somewhere. When you look at the chart, especially in the higher time-frames, bitcoin is technically a thing of beauty. Support and resistances are really clear cut, and it can be seen that this 6-monthly candle is sat nicely on the support that was first formed by the 2017 top.

Source: Tradingview

A close of this candle above $20,000 at the end of this year should be incredibly bullish for bitcoin, and a retaking of the $69,000 high would arguably be just a matter of time.

Back to the present, yes, the dollar is the safe-haven right now, but should the Fed be able to say that inflation is on the way back down at some point in Q4 this year, then an interest rate pivot would likely be on the cards, providing all the fuel bitcoin needs to get back on its upwards trajectory.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.