Bitcoin
According to data source TradingView, the dollar index, which tracks the value of greenbacks against major FIAT currencies, fell to 97.27 early on Thursday, the lowest level since February 2022. The decline follows a July reduction in the Fed rate and growing demand for unfortunate data on housing and consumer trust.
The weakening of the global reserve currency, the dollar, tends to ease financial conditions and encourages an increase in risk taking in financial markets.
“DXY (IS) is currently at its lowest level since March 2022. It has a very bullish impact on global money supply growth and Bitcoin,” said Andre Dragosch, head of research in Europe, said Europe of Bitwise.
BTC and NVDA correlations
Meanwhile, Nvidia (NVDA), a precursor to all AI and emerging technologies, rose 4%.33% on Wednesday, marking a record high of $154.30.
Both NVDA and BTC fell short in late 2022 and have been on an upward trend ever since. At the time of writing, the 90-day correlation coefficient between NVDA and BTC was 0.80, indicating a strong positive relationship between the two assets.
The NVDA's record highs show a continuous risk-on rally that came the day after Nasdaq futures formed a bullish golden cross.
Bonds that tease the recession
The yield on the two-year US bonds, which are sensitive to interest rate expectations, fell to 3.76% early today, at its lowest since May 2nd. Yields fell 24 basis points this month. Meanwhile, the yield over the 10-year period fell by 16 basis points to 4.27%.
Therefore, the spread between the 10 and 2 year yields expanded with a movement known as the steepness of the yield curve.
Historically, wealth advisor Kurt S. Altrichter was X.
“We're not there yet, but we're dancing on the edge. The 10Y-2Y spread is a bull coloring page. When 2Y drops it indicates that the Fed has lost control. That's your cue.
Consumer expectations indicate an imminent recession
Consumer confidence fell to 93 readings, down 5.4 points from May, with Republican respondents leading the decline, according to data released by the Conference Committee on Tuesday.
More importantly, the short-term outlook index has slipped to 69, which is well below the 80 threshold for an imminent recession.
Trader prices for Fed rate reduction
These developments, coupled with oil price slides and talk of interest rate cuts in July by some Fed officials, likely encouraged traders to price early interest rate cuts by the Fed. According to CME's FedWatch tool.
Interest rate swaps are now relaxing four basis points from near zero a week ago to the July Fed meeting, according to Bloomberg. Additionally, traders hope to ease 60 basis points from 45 basis points a week ago at the remaining four meetings this year.
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