As the U.S. dollar index (DXY) reaches new heights, Bitcoin struggles to maintain its critical support. Investors are closely watching the movements of the DXY and the monetary policies of the Federal Reserve, anticipating a short-term target of $80,000 for the leading cryptocurrency.
Impact of Rising DXY on Bitcoin
The crypto markets are going through a phase of uncertainty. This week, the DXY surged to 109.37, a level not seen since November 2022, fueled by rising U.S. bond yields. Ten-year Treasury yields have reached 4.7%, reflecting investors’ concerns over persistent inflation and the economic policies of the new Trump administration. Historically, Bitcoin has shown a negative correlation with the dollar index: when the DXY rises, risky assets, including cryptos, face downward pressure. Thus, BTC dropped this week to $92,500, flirting with its key support at $90,000.
Short-Term Bitcoin Forecasts
Burkan Beyli, co-founder of Biyond, provides a cautious analysis of the situation: “A Bitcoin below $94,000 would pave the way towards $81,000 in the next five weeks.” He emphasizes the importance of the technical level of $95,180 for the upcoming week, especially with the upcoming release of the Consumer Price Index (CPI). However, Jamie Coutts from Real Vision downplays the impact of the dollar’s current strength, instead emphasizing the prospects for liquidity expansion and the pro-crypto orientation of the future Trump administration.
Long-Term Prospects Despite Correction
The current volatility in the crypto market is set against a broader backdrop of financial market readjustment, as players try to anticipate the implications of future U.S. economic policies. While a short-term correction seems likely, the fundamentals of Bitcoin remain solid for many analysts who maintain optimistic long-term outlooks.
Financial analysts continue to monitor changes in U.S. economic policy and their potential impact on cryptocurrency prices. Despite short-term pressure, opinions remain mixed: some experts see recovery potential, while others warn of risks.
