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Bitcoin eyes $20k- Breakout as Morgan Stanley predicts dollar crash

A gloomy outlook for the US dollar is leaving Bitcoin with a potential to continue its bull run towards $20,000.

The greenback’s sell-off accelerated this week as its value against foreign currencies fell by another 0.21 percent in overnight trading. The US Dollar Index (DXY) reached 90.22 on Thursday, its lowest level since April 2018, which prompted Morgan Stanley to predict further declines for the trade-weighted instrument.

Mark Wilson, the chief investment officer and chief US equity strategist for Morgan Stanley, told Bloomberg that he sees the US dollar crashing by another 10 percent within the next twelve months. The analyst noted that the Federal Reserve and the US government has been “the most aggressive with structural deficits” amid the coronavirus pandemic.

“A weaker dollar is helpful for the world,” he added. “A stronger one is more of a constriction on global growth […] It is ultimately a positive story for reflation.”

Analysts at JP Morgan & Chase Co. also believed in a bearish US dollar outlook for 2021. The bank’s lead portfolio manager in Asia rates and forex, Julio Calegari, said that China’s post-pandemic growth reduced the greenback’s investment appeal.

Bitcoin

The statements appeared as Bitcoin continued to tower near its recently established all-time high of $19,915. That brought its year-to-date profits up by 179 percent as of this Tuesday. The BTC/USD exchange rate was up 5.61 percent on a weekly timeframe, a complete opposite of how the US dollar index performed.

Both BTC/USD and DXY has shown an inverse correlation this year, especially after the mid-March global market rout. In the month, the Bitcoin price crashed by almost 60 percent in just two days. On the other hand, the dollar showed strength and jumped by 8...

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