The cryptocurrency market is known for its high volatility and erratic price movements. Speculations about market rigging have circulated for a long time, and some investors wonder what moves the cryptocurrency market. The answer is simple: Bitcoin. Bitcoin’s market capitalization accounts for around 50% of the total cryptocurrency market, making it the most crucial factor in determining the market’s direction.
When Bitcoin’s price goes up, other cryptocurrencies’ prices tend to follow suit. Similarly, if Bitcoin’s price declines, the rest of the cryptocurrency market is likely to suffer as well. Therefore, knowing what moves Bitcoin is crucial for investors who want to make informed investment decisions.
Recently, Bitcoin’s price movements have shown a dependency on the US dollar. Bitcoin’s performance has followed the strength or weakness of the dollar index (DXY) chart closely. This means that if the US dollar enters a bearish market, Bitcoin’s price will rise, and if the US dollar enters a bullish market, Bitcoin’s price will decline, as seen in the bear market of 2022.
The chart above clearly shows that when the dollar index was at its lowest in October 2022, Bitcoin’s price was still trading well below $20k, indicating a lack of correlation with the dollar at that point. But once the dollar began to strengthen, Bitcoin’s price also started to decline, showing a close relationship between the two. As a result, Bitcoin holders should keep an eye on the US dollar’s performance and believe that the dollar will weaken in the future to feel more comfortable holding Bitcoin.
In conclusion, Bitcoin continues to move the cryptocurrency market, and its dependency on the US dollar has increased significantly. Investors who are interested in investing in cryptocurrency should keep an eye on Bitcoin’s performance and the US dollar’s movements to make informed investment decisions.