Cryptocurrency analyst Michaël van de Poppe has revealed four cryptocurrencies that he believes should be on a trader’s watch list. In addition, the Dutchman drew attention to a rather unusual indicator: the DXY, also known as the “dollar index”.
This index measures the strength of the dollar against a basket of other reserve currencies such as the euro, yen and pound sterling. In other words, the index assesses whether or not the dollar is strengthening against its peers. The higher the level of the DXY, the greater the strength of the dollar in the world.
According to the chart, DXY is in the region of 108 points, the highest since April 2022. And for van de Poppe, this is a negative sign for the cryptocurrency market.
Historical series of the DXY index. Source: TradingView.
Cryptocurrencies Will Depend on DXY, Says
The analyst cited DXY after talking about the first two cryptocurrencies he has his eye on: EOS and Polygon (MATIC). For van de Poppe, EOS (EOS) is in the midst of a strong rally, but the analyst still has his eyes on MATIC and also on BNB.
“Apparently, EOS has one of the strongest performers lately. I think I would focus on MATIC [e] BNB on trends, honestly. BNB is acting super strong. By the time DXY shows weakness, they will likely take off,” she explained.
At the time of writing, the DXY remains above 108 points and with an optimistic trend. This is reflected in the strength of the dollar against its global peers. This Wednesday (24), for example, the euro trades at US$ 0.993, the lowest value since 2002 and far below par.
Therefore, as long as DXY remains above this level, cryptocurrency prices will continue to have limited growth capacity. For the market to recover again, the index needs to be below 108 points again.
“All eyes are on DYX. If it drops below 108 points again, we will have a false appreciation and the (cryptocurrency) market will appreciate again. Otherwise, the trend (upwards for the dollar) will continue and risky assets will have more losses,” said van de Poppe.
Market cap of cryptocurrencies and BTC
Next, van de Poppe looks at the total graph, which measures the cumulative market capitalization of all cryptocurrencies. According to CoinMarketCap, the total market cap is US$1.043 trillion, or about R$5.37 trillion at current exchange rates.
Van de Poppe says his bullish thesis remains intact despite the recent slump in cryptocurrency markets. However, the analyst said the total market value is still expected to drop further.
“The total market cap of cryptocurrencies is still on the way to further devaluations. Maybe as high as $900 or $925 billion, for confirmation. The scenario still stands,” he said.
As for BTC, Van de Poppe says he sees BTC experiencing yet another correction move in line with its predicted higher bearish scenario for the market cap chart.
“It is a deep correction in the markets, but BTC remains relatively stable. One more sweep of the lows is not unexpected, and I think we are still relatively close to the low,” he said.