Recent volatility in the cryptocurrency market has drawn investors’ attention to selling pressure, and market analysis company Swissblock, in its new report, stated that the biggest risk facing Bitcoin is not direct sell-offs, but the strengthening US dollar.
According to the company’s assessment, a significant portion of Bitcoin’s past bear markets coincided with periods when the US Dollar Index (DXY) recovered from its lows and entered an upward trend. Analysts emphasized that risky assets generally come under pressure during periods when the dollar gains strength in global markets, and Bitcoin is significantly affected by this situation.
The report states that while a weak dollar created a supportive environment for Bitcoin, market sentiment reversed as the DXY index returned to an upward trend. According to Swissblock, a strong dollar reduces liquidity in the markets, lowers investor risk appetite, and increases selling pressure. These developments limit Bitcoin’s upside potential.
Analysts also evaluated the price movements seen in recent months. They stated that the increases experienced in April and the first days of May should be considered temporary recoveries rather than the beginning of a sustained bull market. According to the report, these increases were not strong enough to eliminate the fundamental problems in macroeconomic conditions.
Swissblock stated that for Bitcoin to re-enter a strong and sustainable upward trend, the upward momentum in the US dollar needs to weaken. It is predicted that as long as the dollar maintains its power in the global financial system, new capital inflows into the cryptocurrency market may remain limited, and investors may act more cautiously.
Experts believe that in the coming period, the US Federal Reserve’s monetary policy decisions, inflation data, and movements in the Dollar Index will continue to play a decisive role in determining the price of Bitcoin. Therefore, investors should closely monitor not only developments in the cryptocurrency market but also global macroeconomic indicators.
*This is not investment advice.
