Bitcoin traders have set a short-term price target of $80,000 as DXY hits new highs.
Cryptocurrency markets fell for a second day as the US Dollar Index (DXY) hit record highs amid rising Treasury yields and investor concerns about the Federal Reserve’s monetary policy plans.
DXY started the week down 0.92%, followed by Bitcoin (BTC)’s surge to $102,000, but the index reversed course and reached 109.37, a level not seen since November 2022.
The market also reacted negatively to the surge in U.S. Treasury yields. The yield on 10-year Treasury bonds exceeded 4.7%, and the yield on 30-year Treasury bonds rose to 4.93%. The catalysts for the increase are varied and complex, but it essentially reflects market participants’ concerns that inflation will continue to rise as President-elect Donald Trump’s economic policies are likely to widen the deficit.
Simply put, markets are starting to price the potential for increased long-term debt in the United States, and the incoming Trump administration’s policies are expected to push inflation higher even as it boosts growth.
relevant: Risk of Bitcoin price falling to $88,000 due to ‘Trump dump’
Naturally, Bitcoin price reacted negatively to the DXY strength and analysts are concerned that yield curve control will become a common talking point again.
DXY vs BTC 3-day chart. Source: TradingView
BTC fell to an intraday low of $92,500, with analysts warning that the price could continue to fall in the near term if support at $90,000 is not maintained.
Biyond co-founder Burkan Beyli told Cointelegraph:
“If Bitcoin falls below $94,000, the next target will be $81,000 in the next five weeks. For an adverse situation to occur, Bitcoin would need to close below $95,180 next week. Next week is the CPI, so the bears may show their hand. Overall, I am bearish on cryptocurrencies for the short term (4-5 weeks), but I am very bullish as I expect a correction in the DXY after Trump’s inauguration.”
Jamie Coutts, chief cryptocurrency analyst at Real Vision, appears to agree with Beyli’s view, assessing DXY’s recent strength as less relevant than the expected liquidity expansion and cryptocurrency-friendly stance of the incoming Trump administration.
As the dollar’s strength became a reality, it was expected that Bitcoin would reach the $80,000 range by now. This signals the strength of the underlying bid and market expectations that the Fed will take action. Otherwise, things will start to fall apart.
— Jamie Coutts CMT (@Jamie1Coutts) January 7, 2025
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.
