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Digital asset manager CoinShares says Bitcoin (BTC) is not likely to see a big impulse to the upside for at least the remainder of this year.
In a new bi-weekly report, CoinShares says that the US dollar index (DXY), which pits the USD against a basket of other fiat currencies, may have more gas left in the tank of its multi-month rally.
A high DXY usually implies downward pressure on most risk assets like Bitcoin.
“The DXY looks overpriced but could appreciate further in the near-term while the prospect for a recession is far from conclusive. It looks as if the monetary policy terminal rate (according to consensus) will peak in the US before it does in its key trading partners, this coupled with the likeliness of weaker economic data in the US, suggests the DXY is likely to peak towards the end of the year.
Due to bitcoin prices being highly inversely correlated to the DXY, bitcoin prices are unlikely to have a significant upside breakout this year unless we see an unexpected deterioration in macroeconomic data.”
The leading crypto asset manager says that a reversal in hawkish monetary policy from the Federal Reserve is unlikely anytime soon, which is an additional weight on BTC.
“It is clear, for now at least, that the US Federal Reserve (FED) is not about to ‘pivot’ to a softer monetary policy stance as many had expected at the recent Jackson Hole event. This had an immediate effect on the US Dollar and interest rate-sensitive assets such as equities and bitcoin.
The hawkish rhetoric from the FED is likely to have a continued dampening effect on the bitcoin price outlook until their perception of macroeconomic data justifies a pivot.”
CoinShares forecasts continued pressure on Bitcoin unless some type of “unexpected deterioration in macroeconomic data” shows up.
At time of writing, Bitcoin is trading at $19,178, or about 72% from its all-time high of $69,000.