bitcoin is still trading above $ 20,000 but yesterday launched its first real correction after the rally, with the price down as low as $ 21,874. bitcoin (btc), the leading cryptocurrency that is thought to be in decline due to new developments in the coronavirus outbreak, has also taken altcoins down with it.
analysts say whether this correction will be the start of a new bear market depends on a new fracture appearing in dollar charts. because the first crash in the economy due to coronavirus caused the dollar to rise. at the moment, it remains unclear whether the situation will become similar again.
safe harbor: bitcoin
in 2020, investors in particular were looking for a safe haven. when the pandemic first appeared and panic took over the markets, investors turned their assets into dollars and chose the dollar as a safe haven.
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but it later became clear that the dollar was not as safe an asset as thought, due to the steps taken by governments. because money printing policies were driving up inflation while reducing the value of the dollar. for this reason, asset owners began to move their assets to bitcoin, relying on bitcoin’s safe harbor argument.
even institutions, not just individuals, have opted for bitcoin in 2020, and microstrategy has announced it has chosen btc as its reserve currency.
is the dollar gaining strength?
as 2020 prepares to end as above, a new wave of decline has begun in the markets due to new developments related to coronavirus. this situation reminds me a little of march. the dollar appears to be gathering strength as bitcoin charts its decline, according to analysts.
the dxy dollar currency index is a basket of the best global forex currencies weighted against the us dollar. that index does a solid job of providing a basic snapshot of the strength or weakness of the dollar, according to analysts.
on the other hand, 2020 has not been a good year for the global reserve currency. more than 30% of all us dollars in circulation have been printed this year, and this has caused fears of inflation to start both in individuals and institutions.
bitcoin and dollar
many names have turned their dollar-denominated investments into bitcoin over the years, and in btc it hasn’t actually squandered investors ‘ confidence. the leading cryptocurrency, which fell to $ 3,600 in march, recently rose to $ 24,200.
but if the dollar gains strength, bitcoin could enter a period of decline again. however, we should not ignore the fact that btc will gain strength if governments continue to print money due to new coronavirus developments.