Author: Big Smokey, CoinTelegraph; Translated by: Wu Zhu, Golden Finance
Due to rising U.S. Treasury yields and concerns among investors regarding the Federal Reserve's monetary policy plans, the Dollar Index (DXY) is reaching new highs, and the cryptocurrency market has plummeted for the second consecutive day.
Despite the Dollar Index opening down 0.92% this week, Bitcoin suddenly rebounded to $102,000, but the index then reversed course, reaching 109.37, the highest level since November 2022.
The market also reacted negatively to the surge in U.S. Treasury yields, with the 10-year Treasury yield breaking above 4.7% and the 30-year Treasury yield rising to 4.93%. Although the catalysts for the rising yields are diverse and complex, they essentially reflect market participants' concerns that inflation will remain high, as the economic policies of then President Donald Trump may exacerbate the deficit.
In short, the market is beginning to digest the possibility of an increase in U.S. long-term debt, and policies expected from the incoming Trump administration are likely to drive up inflation, even if they promote economic growth.
As expected, the price of Bitcoin reacted negatively to the strengthening Dollar Index, with analysts concerned that yield curve control will once again become a hot topic.
3-day chart of DXY and BTC. Source: TradingView
BTC dropped to an intraday low of $92,500, with analysts warning that if the $90,000 support level fails to hold, the price may continue to decline in the short term.
Biyond co-founder Burkan Beyli pointed out:
"If Bitcoin falls below $94,000, then the next target within the next five weeks would be $81,000. To move downward, Bitcoin's closing price next week must be below $95,180. Next week, we will announce the CPI, so bears may reveal their hand. Overall, I am bearish on cryptocurrency in the short term (4 to 5 weeks), then very bullish, as I expect a correction in the Dollar Index after Trump takes office."
Jamie Coutts, Chief Cryptocurrency Analyst at Real Vision, seems to agree with Beyli, believing that the recent strengthening of the Dollar Index is not as significant compared to the expected liquidity expansion and the incoming Trump administration's pro-cryptocurrency stance.
