According to Coingecko data, Bitcoin has returned to $85,000 and has come out of a brutal stretch that has dropped by 14% since OG Crypto fell 23% below its January history high.
The rebound will go against expectations after weeks of upset turmoil when stocks and crypto markets surge together and fueled President Donald Trump’s tariff threat.
For the majority of the week, Bitcoin hovered at nearly $80,000, and remained stable even if the global market was a hit. While some investors saw this as a potential purchase opportunity, others feared the pain ahead.
Now, suddenly, back to the $90,000 territory, there are eyes on whether this rally has legs or a temporary bounce of relief.
Bitcoin follows the trends in dollars and liquidity
Bitcoin prices have long moved in the opposite direction to the US Dollar Index (DXY).
Analysts tracking the crypto market say Bitcoin will follow DXY with a 10-week delay. In other words, when the dollar peaked on January 13th, Bitcoin was still absorbing the impact of the strong dollar environment since the second half of 2024.
However, the dollar has been weakening since mid-January, and Bitcoin is now reflecting that shift.
Wells Fargo stock analyst Christopher Harvey explained the pattern in this week’s notes. “Bitcoin consistently tracks inverted DXY in a 10-week lag,” writes Harvey.
“The relationship suggests that the current drawdown is a response to a strong dollar in the fourth quarter, and that the weak dollar seen since January could be more constructive for future assets.”
Another major factor during play is the Global Money Supply (M2). Analysts say Bitcoin prices follow the trend in M2 liquidity with a three-month delay.
According to Ed Engel of Compass Point, “The Global M2 peaked in late September, signed in the fourth quarter and bottomed out in early 2025. Since then, global liquidity has recovered along with recent weaknesses in the US dollar.”
Engel believes that cryptocurrency will see even more weakness in March as Bitcoin continues to track M2 growth, but there will be a much stronger rally in the second quarter of 2025.
The crypto industry has gained political support, but the market remains cautious
The US crypto industry, operating under a more lucrative congress than ever, has struggled the market for weeks.
The Trump administration has repeatedly promised that the US will be a better place for crypto companies, but clear regulatory guidelines are still missing.
Meanwhile, Wall Street analysts are divided into Bitcoin outlook. Wolfe Research, which closely tracks technical indicators, is not sure that major gatherings are still here.
“We see a fully remarkable breakdown throughout the key support levels,” the company wrote in a report this week. “This is not an action by a group preparing the meeting. Instead, we fear that it will speak to us towards a transition into a period of sustained weakness.”
Still, Wolfe’s research said that Bitcoin, which is between $91,000 and $92,000, could provide short-term relief. However, they warned that the move to $90,000 would likely face sales pressure, and that Bitcoin would be more difficult to break through that level.
Stock markets will skyrocket as government shutdowns are likely to decline
Bitcoin wasn’t the only one that bounced back. The US stock market also rose sharply on Friday, with the S&P 500 rising 1.7%, the Nasdaq rising 2% and the Dow Jones Industrial Average rising 1.4%. The rebound came after a brutal week in which stocks saw slipping as Trump’s changing tariff policies rattle investors.
The S&P 500 and Nasdaq Composite both surpass 2% in a week, marking one of the fastest revisions in market history. According to Ritholtz Wealth Management, it took the S&P 500 less than a month to enter the revision territory.
But some relief comes after Senate Democratic leader Chuck Schumer pulled back his threat to block the funding bill and eased fears of government shutdown. At the same time, gold exceeded $3,000 per ounce as investors looked for safe inventory assets amid ongoing economic uncertainty.
Trump also doesn’t support the trade war. On Thursday, he said he had no plans to “bend” the tariffs at all, raising even more tensions with America’s biggest trading partner.
The Federal Reserve is also focused. This week’s inflation data showed some improvement, but it wasn’t enough to completely alleviate investor concerns.
The University of Michigan’s latest consumer sentiment survey shows Americans are unsure about the economy at 57.9, well below the expected 63.
