DXY Abyss: GOLD & BTC Shines 💰

17 maj 2023

Hi Traders, Investors and Speculators of Charts📈📉

Ev here. Been trading crypto since 2017 and later got into stocks. I have 3 board exams on financial markets and studied economics from a top tier university for a year 🏫

Today's analysis is a little more economic-financial, and we dive into three main assets - Gold, BTC and DXY (money). Remember that being "in DXY" simply means that you are saving in dollars in the bank as opposed to investing in the markets. Recently some concerns have raised across the world causing investor panic because we're seeing 2008 vibes. Some similarities between the 2008-2009 financial crisis and the present situation:

Economic Uncertainty: The 2008-2009 crisis was characterized by the collapse of major financial institutions, high levels of unemployment, and a sharp decline in economic activity. Similarly, the ongoing COVID-19 pandemic has caused economic disruptions, job losses, and uncertainty about the recovery. We're also seeing many banks calling out to the government for help as some have already closed down.

Central Bank Actions: In response to the financial crisis of 2008, central banks implemented unprecedented monetary stimulus measures, including lowering interest rates and implementing quantitative easing programs. Similarly, in recent times, central banks around the world have taken similar measures to support economies affected by the pandemic. These actions have the potential to impact the value of fiat currencies and drive investors towards alternative assets like gold. Furthermore, inflation is rising across the world and the DXY continuously loses more value as inflation increases.

Flight to Safety: During times of economic uncertainty, investors often seek safe-haven assets to protect their wealth. Gold has historically been considered a reliable store of value during financial crises. In both the 2008-2009 crisis and the current situation, the demand for gold as a safe haven increased, leading to upward pressure on its price. Since Bitcoin has a positive Correlation Coefficient with gold, we can expect the price of BTC to rise along with gold.

Inflationary Concerns: The massive injection of liquidity into the financial system by central banks during the 2008-2009 crisis raised fears of future inflation. Similarly, the significant fiscal stimulus measures implemented in response to the pandemic have raised concerns about inflationary pressures. These concerns can drive investors to seek inflation hedges like gold and lately, cryptocurrencies such as BTCUSDT.

Incase you missed it : more on BRICS and the dollar potentially being replaced by a new reserve currency:

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