In the sea of chaos and turmoil that the market has become, we all need predictable tools and metrics that can give us an edge on the competition. After taking loss after loss, I began to dive deeper. Hoping to create a deeper understanding, after many hours of insomnia fueled searches I began understanding that the crypto market wasn't a living, unpredictable, sentient being that did whatever it pleased. Rather, it was very closely correlated to one simple graph (although, it can be a lot more complicated with currency swaps etc.)
The DXY or the U.S. Dollar Index often trades inversely to Bitcoin and the crypto market.
In efforts to combat Russia/the Price of Oil, the Federal reserve has been intentionally propping up the value of the DXY to suppress the price of oil. High DXY = Cheaper Bitcoin/Assets
I can't help but wonder if the purpose of Bitcoin for the Federal Reserve is to act as an additional token in a basket that can be utilized to influence these swaps.
At a deeper level than independently tracking DXY - one can also track the value of currencies in the basket
- Euro (EUR), 57.6% weight
- Japanese yen (JPY), 13.6% weight
- Pound sterling (GBP), 11.9% weight
- Canadian dollar (CAD), 9.1% weight
- Swedish krona (SEK), 4.2% weight
- Swiss franc (CHF), 3.6% weight
Certainly, we are playing a game of chicken and when the "Wizard" behind the curtain decides the game is up, we will find ourselves with much more pain.
If there is interest, I can further elaborate how to overlap the strategy of utilizing the DXY with traditional trading metrics such as Volume, RSI, or even Bollinger.
These ideas might be very obvious to some, but for an average dummy like myself, were not known when beginning this humbling adventure.
Until next time, ride the waves.