How Bitcoins Price Depends on the Dollar
All assets in the world trade against the dollar, Bitcoin is no exception. The BTC/USDT pair is one of the most popular on cryptocurrency exchanges. Only the role of the dollar is performed by its electronic counterpart - the currency Tether, the rate (1 USDT = 1 dollar) which is guaranteed by the presence of the US currency in the companys accounts.
How the dollar strengthens
To understand the dependence of the Bitcoin exchange rate on the dollar, consider transactions with trading pairs on the spot market. To buy Bitcoin, you must have the right amount in USDT on your account, you will get it after selling local currency on spot, such as ruble, dirham or tenge. By the way, buying the dollar weakens the local currency and strengthens the dollar.
How Bitcoin Strengthens and Weakens
Далее на спот-рынке нужно выбрать пару ВТС/USDT и нажать кнопку «КУПИТЬ», доллары будут списаны (на момент написания 1 BTC = 17,000 $ ) и на счете появятся биткойны. Продажа доллара ослабит его в краткосрочной перспективе, но укрепит биткоин. Если вы обменяете 1 Bitcoin, выберите пару BTC/ USDT и нажмите «SELL», будет списан 1 BTC и начисленных $17,000. На этом этапе Bitcoin ослабевает.
How Bitcoin Drops in Value
To better understand the interdependence of the two currencies, imagine that the stock exchange was simultaneously put forward many bids to sell Bitcoin. The exchange is so arranged that as the bids are fulfilled, bitcoins will be sold cheaper, for example, for: 15, 14, 12, 10 thousand dollars. And the more coins are put on sale, the stronger the rate will fall. So often operate manipulators, collapsing low-liquid assets. However, the dollar will strengthen, because it is bought.
What is a dollar index
Economists have long defined the relationship between the dollar and the basket of the worlds largest currencies, forming a trade indicator - the dollar index (DXY).
DXY reflects the dependence of the US currency on the currencies of the rest of the world. You can view the DXY change graph yourself, at the time of writing it is 105 items.
It is possible to formulate a rule (in which there are exceptions): «If the DXY index grows, it is likely that Bitcoin will fall and vice versa» . Note that this relationship is not always linear and can be extended over time, but the rule works in long intervals.
When making your trading strategies, consider this fundamental connection or identify other dependencies, because cryptocurrencies are many, and their rates are moving according to their patterns.