China’s yuan, CNY, has been gaining against the dollar since mid June, rising from one dollar buying you close to 7.2 CNY, now to 6.98.
That’s while the dollar’s strength index has been falling considerably from above 100 to now 96 where there’s a significant support line as it nears a two year low.
As bitcoin is primarily traded against the dollar, a fall in the value of usd should lead to a rise in bitcoin’s price.
The strengthening CNY however may be counterbalancing, with both China and America a very big market for bitcoin and other cryptos.
As China had a far shorter lockdown of just three weeks, compared to some three months for much of the west, its economic recovery from the temporary shock has been quicker, leading to a strengthening of their fiat money.
As their fiat money is now more valuable, they need to spend less on it for one bitcoin, which if all was equal would translate to a lower price for btc.
The opposite has been the case for the dollar however, with it now being less valuable and so more are needed for one bitcoin.
These two factors in opposite direction may have contributed to bitcoin moving in a straight line, but if it was due to just strength indexes, then you’d expect the same to be the case for other assets.
Gold has been rising instead and a lot. Much of the newly printed dollars find their way to stocks, so they have been rising too. Even property prices might be rising now due to more cheap money if you can get banks to lend it to you.
On the other hand because bitcoin is global and traded more by ordinary investors, rather than banks, it may be more affected by these fiat movement.
In addition unlike stocks or other assets, bitcoin is used in international trade especially with China.
Just how many bitcoins are used for this purpose daily is difficult to estimate, but may be in the hundreds of millions and perhaps even a billion dollars a day.
Thus while other assets are local in as far as US stocks are mainly bought by Americans for example, bitcoin’s free movement across the world gives it a global price and at any point in time.
Making it potentially more sensitive to fiat movements, and therefore explaining at least partially the recent sideways.