Since Donald Trump was re-elected as US president-elect, the value of the US dollar (DXY index) has risen by more than 3%. This is reminiscent of a similar pattern during his first term in 2016, when the DXY index peaked in December before declining for a year. This time, however, the course appears to be different, which could have significant consequences for the Bitcoin price.
Dollar gaining ground, Bitcoin under pressure
The DXY index, which measures the value of the dollar against other major currencies, is currently showing no signs of weakening, unlike at the end of 2016. Supported by Trump’s economic policies and the Federal Reserve’s high interest rates, the dollar remains attractive . This is generally bad news for risky assets like Bitcoin, which has an inverse correlation with the dollar.
Although Bitcoin briefly reached a record high of $108,300 after Trump’s election victory, the price has since fallen by 10%. “The Fed is currently between the hammer and anvil,” said Andre Dragosch of Bitwise. “They risk either a recession or an acceleration of inflation. Both scenarios are challenging for Bitcoin.” According to Dragosch, high government bond yields and a strong dollar remain a short-term headwind for Bitcoin.
Trump and geopolitical uncertainty
In addition to the strong economic performance of the US, with GDP growth of 3% and inflation above target, geopolitical uncertainty plays an important role. Trump’s announced import duties increase demand for the dollar as a safe haven.
This situation is in stark contrast to 2017, when Bitcoin experienced a massive bull market. Analysts warn that without a significant weakening of the dollar or a policy change at the Fed, Bitcoin will struggle to reach new highs.
Bitcoin remains attractive to investors
Despite the macroeconomic headwinds, Bitcoin remains an attractive asset. In recent months, BTC has shown itself to be resilient, even in a challenging economic environment. However, whether the strong dollar and geopolitical uncertainty will hinder Bitcoin’s long-term growth remains a key question.
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Source: https://newsbit.nl/sterke-dollar-na-herverkiezing-trump-wat-betekent-dit-voor-bitcoin/
