Bitcoin is currently on an uncertain threshold, struggling against the sharp rise in the US dollar. A new currency war is brewing, with a clash demonstrating the dominance of the US dollar over the digital currency domain. With Trump ready for launch policy which strengthens the US dollar, Bitcoin takes the hit in the middle of such a story, with strong forecasts of BTC reaching a new low on cards this season.
US dollar may end up above 110
Historically, the US dollar and Bitcoin have shared an inverse relationship. A strong US dollar often indicates market sentiment that favors the USD as a valuable hedging asset rather than bitcoin. If the USD continues to grow and expand, it would mean that market support is now swinging against the dollar, taking Bitcoin away from its recent exploits and achievements.
Quinten Francois, a leading crypto educator, shared a similar stance, adding how a strong US dollar could be bad news, especially for BTC enthusiasts.
Meanwhile, Trading View analyst has shared how Bitcoin could fall as low as $80,000 as the USD continues to gain strong market positioning.
“If Bitcoin falls below $94K, then the next target is $81K within the next five weeks. For the downside to play out, Bitcoin needs to close next week below $95,180. Next week we have CPI, so bears might show their hand.” Overall, I am bearish on crypto in the short term (4 to 5 weeks), then very bullish as I expect DXY to correct after Trump takes office.
Why a strong US currency is also bad news
In a twist to the narrative, an overly strong US dollar is also a problem for the US economy to deal with. For example, HZ, a leading financial expert, shared how an overinflated US dollar can initiate new issues for the economy to interact with.
“DXY at 110 is dangerous. A few more points up, and markets will collapse. A rising dollar triggers a global credit crunch, kills liquidity, destroys earnings and crushes emerging markets. If you’re caught off guard, you’re on a trapdoor,” HZ said.
