Bitcoin rebounds to $61,000 as US Dollar Index hits 2024 lows

Bitcoin (CRYPTO:BTC) has reclaimed the $61,000 mark following the release of the Federal Open Market Committee (FOMC) minutes, drawing renewed attention from investors.

The cryptocurrency's recent price movement highlights its strong correlation with global liquidity and the weakening US dollar.

The US Dollar Index (DXY) has recently reached new lows for 2024, falling to $100.923 on Wednesday, after breaking below its January 1 low of $101.340.

As of the latest update, it is trading at $101.311.

A declining DXY often signals a favorable environment for risk assets such as Bitcoin, as investors look for alternatives to the weakening dollar.

Simultaneously, global liquidity, measured by M2, is on the rise.

M2 includes the total amount of money circulating in the economy, such as checking and savings accounts.

Typically, increased liquidity benefits risk assets like cryptocurrencies.

Historically, a 10% rise in global liquidity has corresponded with a 40% increase in Bitcoin’s price, according to Cryptonary.

The FOMC minutes suggest that the Federal Reserve may ease monetary policy in its upcoming meetings.

The minutes also revealed that some policymakers supported a 25-basis-point rate cut during the July meeting, though the Fed decided to keep rates unchanged.

The probability of a 50-bps rate cut in September has risen to 30.5%, reflecting market expectations for a more accommodative policy.

Fed Chair Jerome Powell’s upcoming speech at the Jackson Hole symposium is anticipated to provide further guidance on the Fed's policy direction.

Markets will be watching closely, as any indication of a shift in policy could impact risk assets like Bitcoin.

For Bitcoin to maintain its bullish momentum, it needs to hold above $60,000 and break through the supply zone between $65,777 and $68,424.

A stable close above $60,000, supported by the Relative Strength Index (RSI) staying above 50, would confirm an ongoing uptrend.

Conversely, if Bitcoin falls below $60,000 and breaches the symmetrical triangle's upper trendline, further declines could occur, with potential support zones between $53,485 and $57,050.

At the time of reporting, the Bitcoin price was $60,533.67.