Bitcoin is now surging after a rejection prevented further highs around the time Coinbase Global went live on Nasdaq. The same stock market is booming alongside crypto – both markets have become parabolic towards a common denominator: the dollar.
The “exponential decay” of the greenback is expected to continue, and crypto and stocks will continue to benefit. However, a short-term reduction in hyperinflation could lead to a pause in the bull market.
If almost every stock or crypto chart that reads USD $ on the same asset is parabolic, you will see an exponential drop in the denominator. In the short term, they run the risk of crashing the market to mitigate some of the effects of ongoing hyperinflation.
– Jess Martini @ (@btcty) April 20, 2021
The decline in USD inflation becomes parabolic against Bitcoin, the stock market
Look back at around 14 months ago, before Black Thursday rocked finances and when the pandemic began. The stock market and cryptocurrencies were decimated by the panic that followed.
However, as a result of governments inundating the money supply with more money than ever before, both markets became ballistic. A bull market broke out in both stocks and cryptocurrencies, pushing all major indices to new all-time levels, and Bitcoin broke all previous records.
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The stock market and crypto do well for completely different economic factors and are so different asset classes that the real reason for the sudden parity is the dollar.
Crypto and the stock market have both gone parabolic against the dollar | Source: BTCUSD on TradingView.com
Exponential decay according to the dollar currency index
The dollar is in trouble – there is no doubt about it. The value against other top world currencies has fallen, according to DXY. Compared to Bitcoin and stocks, the decline has become parabolic.
If you shrink the DXY, it could indicate that the worst for the greenback is yet to come. A massive symmetrical triangle has formed, similar in shape to the one Bitcoin broke up from to start the bull market.
If the above pattern confirms, the dollar's fall hasn't even started | Source: TVC-DXY on TradingView.com
Except before the consolidation of Bitcoin, the previous trend was up. The dollar has been the predominant trend in the downward direction and things could go further here if the “exponential decay” continues as expected.
A decline on the order of magnitude provided by the measurement rule could bring the world’s leading currency to historic lows. And with the USD as the base currency by which all other assets are measured, the price movement could get a little wild.
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When that happens, Fiat will die a quick death from Bitcoin, even if a strategy to prevent short-term inflation is somehow put in place and the dollar gets some breathing space.
Technical factors in Bitcoin and stocks also suggest a correction sufficient to provide immediate relief to the dollar. But afterwards it comes back to the destruction of the global reserve currency.
Featured image from Pixabay, Charts from TradingView.com