One of our followers reached out asking whether we also noticed the positive correlation between the USD and Bitcoin. It was a trigger to go back to the investing thesis we have been talking about for years: crypto can also create a secular bull run in a market environment with a rising Euro. But what about the last 3 months? The USD has been rising (Euro falling) alongside a rising crypto market?
As said countless times in our public posts and more so in our premium services: the Euro is the global indicator for risk in markets. It’s a risk barometer, a risk indicator.
Whenever the Euro does well it tends to push most stock markets higher. Also, ultra volatile assets like crypto do well and are able to generate bullish momentum.
We went back 5 years in time and mapped BTC to both the Euro and USD.
The first chart represents the BTC vs. Euro correlation. We highlighted a few periods in green, those are the times in which BTC was rising. We then mapped to the Euro chart (lower panel of the chart).
It couldn’t have been easier than this: the two times in which BTC went through a secular bull run were times in which the Euro was also going through a strong bull run. The one tactical bull run of BTC back in 2019 occurred in a period in which the Euro was stabilizing in the context of a decline.
The first chart represents the BTC vs. USD correlation.
Here we flipped our approach, and indicated the USD bull runs with the red shaded areas. Clearly, BTC was going through a period of a reversal whenever the USD was strong.
This brings up the question: what about today?
Well, today we are still going through a reversal in crypto. BTC might be close to ATH but that’s meaningless. In the bigger scheme of things there is no secular bull run in BTC since April/May of this year.
BTC may still move higher but the probability of a secular bull run is low unless the Euro makes a spectacular turnaround. If not we may see capped upside potential in BTC. This does not mean that BTC may not move to 100k or even higher, but that’s not a bull run it would qualify like a tactical bull run similar to the one in 2019.
In our crypto investing research service we track BTC very closely with several chart setups. We also track 23 altcoins, and flash crypto alerts with individual coin tips whenever they come up through our research.