Technical analyst Amir Jafarzade examines a variety of indicators in order to determine whether the market has bottomed out or if there is still more downside volatility to come.
Bitcoin’s spot price has fallen by more than 70% from November 2021 highs due to the heightened macro-driven volatility that had been widespread with escalating inflation around the world and interest rate hikes in the US.
Due to their volatility, most analysts have likened the price changes of Bitcoin and Ether to tech stocks, but the DAX, an unexpected index, has a stronger correlation with the leading cryptocurrencies. The DXY has the biggest inverse correlation as the dollar gets stronger.
Let’s start with the dollar index chart, or DXY chart, which showcases the strongest inverse link between Bitcoin and Ethereum. The dollar is strengthening as investors flee risky investments, and further gains are anticipated in the coming weeks as concerns about riskier assets grow.
The DAX index, which stands for Deutscher Aktienindex, is the most prominent stock index in Germany. A weighted average of the stock prices of 30 German companies is used to calculate this index. This index also accounts for share dividends; as a result, it represents shareholders’ overall income.
The DAX is the index with which Bitcoin has the strongest correlation, and in Amir’s perspective, it is in the final waves of a certain downward structure. I expect the index to go lower.
A more comprehensive view of the current market state using a monthly time frame on the Bitcoin chart; The dynamic support line has been broken, and following a rejection at the trendline as can be seen in the charts, a new bottom that is closer to the horizontal support which sits around $13,992 is more likely.
I expect a similar drop for Bitcoin in order for DXY to see the appropriate rise (DXY is inversely connected with Bitcoin). The likelihood of this slide is also increased by the direct association with the DAX, which is in a downward structure. The chart conditions for bitcoin also favor a significant decline.
It is therefore conceivable to foresee a downward period with a high probability when looking at macro correlations with Bitcoin and the efficiency of the entire crypto from Bitcoin.
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