U.S. Treasury Secretary promises another $1,200 cheque for each citizen; DXY weakness opens up new upside opportunities for Bitcoin
This week, Bitcoin (BTC) may see prices rise while the dollar index (DXY) is getting weaker and weaker, and an analyst invites US voters to buy the crypto asset.
Data show that DXY marked the fourth consecutive day of losses on 1 October, while negotiations continue in Washington on a new stimulus package to counter the consequences of the coronavirus pandemic.
Vays: „Buy Bitcoin“ no matter who wins the election
In recent months, DXY and BTC/USD have shown a strong reverse correlation. Recent increases in DXY have not translated into intense sales pressure for Bitcoin, but the new losses could benefit BTC’s bullishers in the long term.
The U-turn in the fate of DXY occurs as the U.S. Senate seeks a new coronavirus-related economic aid deal, which could cost $2.5 trillion.
On Wednesday, in an interview with FOX Business, Treasury Secretary Steven Mnuchin confirmed that negotiations are ongoing, adding that any deal will include a new round of $1,200 grant cheques for eligible U.S. citizens.
„The good news is that we have reached an agreement to ensure that if a plan is implemented, it will include direct payments similar to the last package,“ he explained.
Mnuchin made this comment the day after the heated debate between President Donald Trump and candidate Joe Biden.
As tensions flare up, well-known trader Tone Vays has tried to capture the attention of the online public by arguing that no matter who takes control of the White House, the money press, through which the subsidy packages are funded, will continue to damage the dollar.
„No matter who wins, they will continue to print BUY BITCOIN,“ Vays wrote in a live chat during the broadcast of the debate.
Correlation between Bitcoin and DXY falling
Meanwhile, data indicates that the contraction of the last few days has begun to alter the correlation between DXY and Bitcoin.
The following graph, made by the analysis resource Digital Assets Data, represents the comparison of the correlations between the 90-day returns of Bitcoin and the DXY, gold, VIX and S&P 500, highlighting the relationship with the DXY in free fall towards the end of September.
On the contrary, BTC/USD remains closely correlated with both gold and S&P 500, and with the beginning of October the Bitcoin price marked its second best quarter in history, closing the month above $10,600.
As pointed out by Cointelegraph, however, not everyone believes that this situation will last very long; soon Bitcoin should completely detach itself from traditional markets.