The underlying dynamic of the price of Bitcoin $BTC
The underlying dynamics behind these movements are two.
The first, and most important, is the inverse correlation between the trend of Bitcoin’s price and the trend of the Dollar Index in the medium term.
The second, on the other hand, is linked to the political and social situation in the USA.
In fact, starting from Saturday, there have been clashes between protesters and law enforcement in Los Angeles, which quickly escalated into actual scenes of civil war.
President Trump has threatened to send the army, and the crypto markets, with traditional exchanges closed, have started to think that the Dollar Index could open sharply lower today.
Therefore, between Saturday and Sunday, the crypto markets probably started to price in a strong decline of the Dollar Index on Bitcoin, which, however, did not arrive.
The problems of the USA
At this moment, it seems that the key to understanding the price movements of Bitcoin is precisely the situation in the USA.
The most important financial indicator to monitor is probably the interest rate of the 10-year US government bonds (US10Y), which, however, has been fluctuating around 4.5% for almost a month without direction.
Note that at the beginning of April it had dropped to 4%, but subsequently it recorded a sharp rise that within a week brought it right to 4.5%.
To this must be added that until 2022 in recent years it had never exceeded 3.3%, whereas starting from September of that year it began a run that led it the following year to almost reach 5%.
That run was due, simply, to the increase in interest rates by the American central bank, but since the Fed started to lower the rates, in September of last year, US10Y instead of falling has risen, from 3.8% back then to the current 4.5%.
This scenario leads to a capital flight from the US markets, resulting in a loss of strength for the dollar, a decrease in the Dollar Index, and an appreciation of Bitcoin.
