Recent volatility in the cryptocurrency market has focused investors’ attention on selling pressure, with market analysis firm Swissbloc saying in a new report that the biggest risk facing Bitcoin is not a direct decline, but rather a strengthening US dollar.
According to the firm’s valuation, most of Bitcoin’s past bear markets coincided with periods when the US dollar index (DXY) recovered from its lows and entered an uptrend. Analysts emphasized that risk assets are generally under pressure during periods of dollar appreciation in global markets, and Bitcoin will be greatly affected by this situation.
The report states that while the weaker dollar created a supportive environment for Bitcoin, market sentiment reversed as the DXY index returned to an uptrend. Swissbloc said a strong dollar would reduce market liquidity, reduce investors’ risk appetite and increase selling pressure. These developments limit Bitcoin’s upside potential.
Analysts also evaluated the price movements seen in recent months. They said the rally experienced in April and early May should be seen as a temporary recovery rather than the start of a sustained bull market. According to the report, these increases were not strong enough to solve the underlying problems in the macroeconomic situation.
Swissbloc said that for Bitcoin to re-enter a strong and sustainable uptrend, the USD’s upward momentum needs to weaken. It is predicted that as long as the dollar maintains its influence in the global financial system, new capital inflows into the crypto market will remain limited and investors may act more cautiously.
Experts believe that the US Federal Reserve’s monetary policy decisions, inflation data, and dollar index trends will continue to play a decisive role in determining Bitcoin’s price. Therefore, investors should closely monitor not only the trends in the cryptocurrency market, but also global macroeconomic indicators.
*This is not investment advice.
