Pairing a strong dollar with a bullish Bitcoin isn’t a daily spectacle. But things are changing.
“There’s a bit of an unusual situation in that both the US dollar and Bitcoin are bullish heading into 2025,” said Paul Howard, chief investment officer at crypto hedge fund Wincent, and former Goldman Sachs trader.
Howard told DL News the rare alignment is mostly due to President-elect Donald Trump.
The dollar’s strength — which is at its highest in two years — stems from the incoming president’s commitment to safeguarding and bolstering the nation’s currency, expectations of economic growth, and sustained high interest raters.
Complementing this is Trump’s pro-crypto regulatory stance, which has further energised market sentiment. Trump has made a number of pro-crypto nominations for key spots, including Paul Atkins for the Securities and Exchange Commission, and David Sacks as AI and crypto czar.
Howard anticipates the Bitcoin-dollar dynamic to persist for the next six months.
Bitcoin is generally touted as digital gold, which means it runs inverse to what the dollar is doing. If the dollar is strong, Bitcoin’s price tends to drop, while a weak greenback tends to prop up the crypto.
Not everyone shares the optimism. James Check, former senior analyst at Glassnode, offers a bearish outlook as 2025 begins.
Market paradox
“Bitcoin is the most sensitive asset to global liquidity,” said Check in his latest newsletter on January 2.
Global liquidity is shaped by three key factors: the US dollar, oil prices, and US Treasury yields — all of which are currently on the rise.
That upward momentum suggests that Bitcoin could face additional downward price pressure, even amidst the favourable regulatory environment being ushered in by Trump.
The Fed’s hawkish outlook for 2025, and its fight to keep inflation down, is fuelling higher US treasury yields, said Howard.
All of this is to mean that the opening bell for 2025 is going to be a choppy one, said Check.
“With bond yields rising like this, we’re more likely to get some swings lower in the near future,” said Check.
Pedro Solimano is a markets correspondent based in Buenos Aires. Got a tip? Email him at psolimano@dlnews.com.
