After plummeting for nearly a year, Bitcoin could soon find a bottom as the Fed turns its attention to suppressing the dollar’s ascent.
Speaking to Stansberry Research Monday, Clem Chambers, CEO of Online Blockchain Plc, noted that a strong dollar was the primary cause of the recent downturn in cryptocurrencies, forex, equities and commodities. According to him, the greenback’s rampant run discouraged investors from purchasing assets not denominated in it since it would crush their value.
“I think the Fed and those guys up there have decided that the dollar is strong enough, and they don’t wait for it to get any stronger,” Clem said, suggesting that weakening the dollar could potentially catapult Bitcoin’s price.
“The dollar’s rampant run has suddenly stopped, and that’s not accidental,” He added that this was excellent news for crypto and other assets. In short, he did not think the dollar would get stronger from its current position, but it was likely to weaken.
However, he warned that it would take a little longer for the Dollar-effect to subside with the Fed hell-bent on pushing its aggressive monetary policies. According to him, although a weaker dollar was a “big hairy deal” for crypto-assets, investors would have to brace for a bumpy road which would likely end in “probably a year to 14 months.”
Since bottoming out in May, the US dollar index (DXY) embarked on a wild bull run as risk assets plunged. Historically, the DXY has been negatively correlated to Bitcoin, given that Bitcoin is still considered an asset. In a recent interview with Bloomberg, FTX CEO Sam Bank-man Fried was also quoted saying that a strong Dollar was the primary cause for the crypto market slump blaming the Fed’s policies.
That said, despite remaining bearish on bitcoin in the near term, Clem is hopeful that the crypto-asset will find a bottom in the $20,000 range as the Dollar retreats. He, however, warns that the price could see another leg down if the US currency stays elevated. According to him, if Bitcoin breaches the $17,000 threshold, it risks plunging to as low as $10,000.
BTCUSD Chart by TradingView
“20k could be a bottom, and I’ve always promised myself ill start buying around this level. But I can’t… I’m happy to sit here and watch…but it’s making a pretty strong case for being pretty close to the bottom,” he added. The pundit also revealed that he would be keeping off Ethereum due to the merge because of its unpredictable volatility.