Cryptocurrency enthusiasts have been closely tracking the ups and downs of the U.S. Dollar Index (DXY) in recent weeks. As the heavily shorted greenback recorded its biggest single week percentage gain since February, the leading Cryptocurrency Bitcoin (BTC) was not left unscathed and dropped by 5.8%. Nevertheless, buyers were able to provide support to the 200-week Simple Moving Average (SMA), an important level for long-term investors. This is a significant development as it showed the market's confidence in the sustainability of Bitcoin's bull trend. To finally convince traders that the recent correction is over, Bitcoin would have to break the $28,500 barrier.

Analyst have identified multiple drivers of the U.S Dollar's recent rally. FX Pro's Alex Kuptsikevich believes that this is likely due to the markets pricing in expectations of some Federal Reserve (FED) easing. Other analysts like Marex's Ilan Solot in line with this notion believes that the dollar could continue to rise, consequently having some negative effect on commodities and cryptocurrencies. On the other hand, Swissblock Insights argues that such a sustained rally would cause a more prolonged downturn in the future that could benefit Cryptocurrencies.

The past week also showed signs of renewed confidence in Bitcoins long-term investment prospects as investors have maintained their positions in wallets known to hold coins for more than 6 months. This suggests a growing belief in BTC's ability to not be too significantly affected by the FX dynamics.

At the time of writing, Bitcoin is trading at almost $27,400, up by 1.4%, and a conclusive break of the $28,500 barrier would be seen as positive news for long-term investors. While the odds are seeming to even out, cautiousness is advised when making decisions about investment into Cryptocurrencies for the next couple of weeks.



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