Bitcoin rises in value as U.S. dollar pauses

Yahoo Finance's Jared Blikre breaks down the latest moves in the markets as bitcoin and cryptocurrencies advance.

Video Transcript

INES FERRE: Call it a bounce back Tuesday after a monumental Monday, where stocks and bonds crashed, a day where crypto watchers will have also noticed Bitcoin breaking from its lockstep pattern with equities. So is this a signal the crypto correlation is ending? Jared Blikre is here with the details.

JARED BLIKRE: I don't know if you want to call it a comeback. I think-- well, did you say bounce back? LL Cool J I would have some words about this. But let me just focus on the price of Bitcoin since I seem to be mangling my own joke here. Bitcoin, BTC-USD, I want to point something out. That USD, that is the US dollar. That's what that stands for. That is the denominator.

So before we go on with our analysis, I want to show you what's been going on with the Dixie. That is the US dollar this year. Now this is an index, and it's heavily weighted towards the euro. But it gives you an idea of the dollar strength. So when we had the US dollar appreciating, that bigger number in the denominator-- Bitcoin up here, bigger number in the denominator-- that means that Bitcoin, the price is going down. And that's what we have been seeing this year so far, along with a lot of other prices.

Now, let's go back to this chart. This is a day chart. Here is a one-year chart. And we can see, just after climbing to nearly 70,000, Bitcoin took a tumble and is hanging out by its lows here. Now, it has been in a very tightly defined trend channel going sideways for several months. Let's go one, two, three, about 3 and 1/2 months. Not really doing a whole much, a whole lot. Now, we did get some excitement when it went up to about 25,000, 26,000. That was in mid-August, but that was subsequently reversed. So essentially, we're in a trading range from 28,000, up to 25,000. That is the range.

Now, we get some steam, we could head up to 30,000 and test this level here. But that hasn't happened yet. What's the news? Well, we got Jay Powell talking about it's going to take some time to get a central bank's digital currency in. But nevertheless, in the meantime, we have to do with the prices that we have. And until Bitcoin clears 25,000 decisively to the upside, we're just in a trading range here.

AKIKO FUJITA: OK, Jared, thanks so much for that. Worth picking up on those comments that we got from Jay Powell today, Ines, talking about the structural issues in the DeFi ecosystem, saying, you know, this time around, we didn't necessarily see what we saw in terms of the pullback in the crypto space lead to financial or affect financial stability. But that's not going to be something that's going to last for very long. All this, of course, happening as we continue to see this talk around regulation and what that looks like around the crypto space.

But at least for today, when you look at where things have moved, I'm thinking back to the conversation we had with David Hollerith last week, where he said watch the correlation here because things are starting to diverge in different ways, right? For a while, we were saying that so much of this was about Fed speak and that suddenly all the crypto traders are worried about the macro picture here. Things moving in a different direction when you think about where they were yesterday in relation to the broader equity space. Too early to call it that, but it's worth something-- it's worth keeping a watch on.

INES FERRE: Yeah, it may be early to call. I mean, you did have people, investors talking about whether crypto was an inflation hedge and such. And then we saw that it really wasn't necessarily. And the question is, will Bitcoin and other cryptocurrencies really surge once the Fed pivots, which doesn't seem to be anytime soon.