Bitcoin's price behaviour for this week surprises us. From 19 September-02 October, FXCM's USDOLLAR basket (top chart) moved up on an absolute basis. Bitcoin (middle chart) remained steadfast and maintained its price level during this period. Comparatively, the NAS100 declined as capital rotated out of the growth index into safer havens.
Interestingly, the recent drop in the greenback (blue vertical) has benefitted the NAS100 more than the cryptocurrency. Given BTCUSD's recent resiliency, we would have expected it to have had a more robust response to the dollar's movement. Instead, the NAS100 has risen by 5.6% compared with Bitcoin's 4.6%, showing its relative strength.
The technology index more keenly feels the benefit, perhaps due to its inherent cash flow dynamic of its numerator - a distinct lack for cryptos. I.e. a turn in monetary policy may not be enough for the crypto industry. It seems as if the market wants something more concrete in terms of intrinsic value to discount.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.