Originally published on: November 14, 2024
As the US dollar continues to soar to year-to-date highs, concerns are mounting about the impact on the current Bitcoin bull run. Real Vision’s chief crypto analyst, Jamie Coutts, is advising traders to exercise caution and avoid making overly speculative bets in the current market conditions.
Coutts highlighted the negative correlation between the USD and Bitcoin’s price in his “liquidity framework” chart, signaling that Bitcoin’s price is sensitive to short- to medium-term momentum shifts. He emphasized the importance of being careful with leverage in such volatile times.
Despite a bullish long-term outlook, Coutts urged traders to be cautious in the short term as the US Dollar Index (DXY) continues to strengthen. Since November 6, the DXY has risen by 3.18%, following the US presidential election. This increase in the dollar’s value has been attributed to speculation surrounding President Trump’s pro-tariff policies and potential inflation.
While Bitcoin’s price has also seen a substantial increase of nearly 28% over the same period, the strengthening dollar raises concerns for Bitcoin traders. Historically, there has been an inverse relationship between the two assets, prompting Coutts to warn that a breakout in the DXY above its resistance level could spell trouble for risk assets like Bitcoin.
Despite this bearish backdrop, Coutts remains optimistic that positive announcements from institutions such as the US Federal Reserve or the People’s Bank of China could reverse the current trend. However, traders are advised to stay informed and conduct their own research before making any investment decisions.
This article serves as a cautionary reminder for Bitcoin traders in the current market environment. Keep an eye on the USD’s movements and be prepared to adjust your trading strategies accordingly to navigate the volatility ahead.
