The US dollar’s weakness draws a short-term bullish outlook for Bitcoin in April.
With sellers pushing the US Dollar Index (DXY) down, the US dollar is starting to weaken once again, which could strengthen the Bitcoin (BTC) momentum in the near term.
Alternative assets like bitcoin and gold are priced in dollars. Therefore, when DXY starts falling, it usually causes BTC to rise against the dollar.
The dollar’s share in global reserves is falling rapidly
According to Holger Zschaepitz, a market analyst at Welt, the US dollar’s share in global reserves is falling rapidly as countries like Russia pursue a depot strategy and prefer gold.
When the epidemic was declared in the first quarter of 2020, the demand for the dollar increased as investors ran into cash because it is a global reserve currency.
However, due to various factors such as the presidential election and the negative outlook for COVID over the past year, it has struggled to outperform other currencies such as the dollar, the Japanese yen and the Swiss franc.
If the US dollar continues to decline, Bitcoin is likely to continue to recover in April.
Historically, April has been a strong month for Bitcoin over the past decade and has recorded positive gains for five consecutive years since 2016.