Weakening Dollar May Catapult Crypto Market, Says Economist Henrik Zeberg: 'Will Create Amazing Environment...Into Last Phase Of This Risk Asset Bull Market'

Author: Benzinga Newsdesk | May 06, 2024 08:34am

A prominent macroeconomist forecasted better days for the cryptocurrency market on account of a weakening U.S. Dollar.

What happened: Henrik Zeberg, who's also one of the bigger names in crypto trading, took to social platform X to highlight the plunging U.S. Dollar Index, a relative measure of the dollar's strength against a basket of six foreign currencies, and yields on government-backed bonds. 

He said that continued declines in the aforementioned metrics would lead to an "amazing environment" for cryptocurrencies in the last phase of the ongoing risk asset bull market. 

You earned it…. 😉🙏

I think push lower in DXY and Yields will create amazing environment for Crypto into last phase of this Risk Asset Bull Market.

I think next phase for #Jasmy is w3!

Later w4 into Summer (while DXY bounces) – and then final boost into late Summer – early… https://t.co/Rcmr3Ua1ms pic.twitter.com/zMY0QyVAvj

— Henrik Zeberg (@HenrikZeberg) May 4, 2024

According to Trading View, the DXY was valued at 105.042 at the time of publication, taking a 2% dive since the start of the month. 

Why it matters: Historically, Bitcoin (CRYTO: BTC), the cryptocurrency market bellwether, has been seen to be negatively tied to the dollar. This means that if the price of one asset rallies, the other one falls, and vice versa.

This behavior puts Bitcoin on the list of risky assets like equities, which also exhibit a similar relationship vis-à-vis the dollar. 

The dollar index surpassed other currencies throughout 2022, rising to a two-decade high of 114.18 in September. This was the time when the U.S. Federal Reserve resorted to aggressive rate cuts to tame inflation. 

Bitcoin was witnessing a bear market at this stage, plunging to lows of $16,000 in the subsequent months. 

However, with inflation cooling and the Fed pausing interest rate hikes, DXY started to bend, while Bitcoin started a bullish trajectory. 

The sentiment of the crypto market was upbeat as Bitcoin surpassed 1 billion on-chain transactions, raising hopes of further growth in the medium to long term. 

Price action: Bitcoin was trading at $65,166 at the time of writing, following a 2.25% rise in the last 24 hours, according to the data from Benzinga Pro. The second-largest cryptocurrency Ethereum (CRYPTO: ETH) was more subdued, witnessing a marginal 0.36% increase in the 24-hour period.

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