The United States dollar rising to year-to-date highs has raised concerns about the sustainability of the current Bitcoin bull run, with a crypto analyst warning traders to be cautious about making overly speculative bets.
“The macro backdrop has soured. Dollar strength is not good for Bitcoin,” Real Vision chief crypto analyst Jamie Coutts said in a Nov. 14 X post.
Bitcoiners should be wary of leverage amid USD highs
Coutts pointed to his “liquidity framework” chart — which illustrates a historical negative correlation between USD and Bitcoin’s (BTC) price — to suggest that Bitcoin’s price is “sensitive to short- to medium-term momentum shifts,” while cautioning traders to “be careful with leverage.”
Source: Jamie Coutts
Coutts said that the long-term outlook is “bullish,” though the chart signals “caution” in the short term.
According to TradingView data, the US Dollar Index (DXY) — which tracks its strength against a basket of major currencies — is 106.7, up 3.18% since Nov. 6, the day after Donald Trump won the US presidential election.
Several recent reports have pointed to Trump’s victory as a significant factor behind the strengthening dollar, with “speculation that T-note yields will increase as inflation increases” due to Trump’s pro-tariff policies.
USD uptrend a worry for BTC investors
Over the same period, Bitcoin’s price has risen by almost 28%. Still, the uptrend in safer assets like the dollar raises concern for Bitcoin traders, as there has historically been an inverse relationship between the two.
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In July 2022, Cointelegraph reported that Bitcoin dropped more than 60% on the year, while the dollar had surged, with the DXY hovering around its January 2003 highs of 105.8, amid recession fears
Coutts warned that “DXY is right at the resistance level. A break above here would not be good for risk assets.”
Source: Jamie Coutts
Still, he said that “this somewhat bearish backdrop” could be reversed by positive announcements from the US Federal Reserve or the Central Bank of the People’s Republic of China (PBoC).
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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.