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The US Presidential elections held last November, which resulted in Donald Trump’s victory, brought an increase in both the dollar and cryptocurrencies such as Bitcoin.
As the dollar continued to strengthen after Trump’s victory, analysts said that this rise in the dollar was similar to the rise experienced after Trump’s victory in 2016.
When Trump was first elected president in 2016, the DXY peaked in December but fell over the next 12 months. The dollar’s decline coincided with Bitcoin’s rise in 2017.
At this point, although there is an expectation in the market that the same situation will happen now, this time the story of the dollar and Bitcoin may be different. Because experts stated that there are no signs of decline in the DXY yet and that Trump’s economic policies and FED decisions may support the rise of the dollar.
While a strong dollar is considered a negative for risk assets like Bitcoin, incoming Trump’s support for Bitcoin has brought new ATHs.
But while Trump has expressed support for Bitcoin, Bitwise Europe head of research Andre Dragosch said a strong dollar and Fed policies could pose challenges for Bitcoin in 2025.
He said the rally in Bitcoin will not continue at the same pace due to a stronger dollar, higher yields and geopolitical uncertainties.
“The Fed is caught between two choices: Do too little, act too late and risk a recession in the U.S., or risk a significant acceleration in inflation again.
The Fed told markets at its last meeting that they would only make two rate cuts in 2025. That’s why the dollar is appreciating and yields are continuing to rise.
“I think the thing that is also affecting BTC and bringing it down is the dollar rising. The macroeconomics are currently a headwind for Bitcoin.”
*This is not investment advice.
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