Since President-elect Donald Trump's recent election victory, the DXY index has risen over 3%, mirroring its historical rise following his first win in 2016. This index measures the dollar against key trading partners and previously peaked in December 2016 before declining over the next year, coinciding with a significant bitcoin rise in 2017. The current trajectory indicates continued strength for the dollar, influenced by Trump’s economic policies and the Fed’s expected interest rate cuts. A strong dollar traditionally impacts risk assets negatively but may not hinder bitcoin's recent growth as Trump has expressed support for the cryptocurrency. Despite bitcoin achieving record highs post-election, analysts, such as Bitwise's Andre Dragosch, suggest potential challenges ahead due to macroeconomic factors. Trump's plans to impose tariffs and a strong U.S. economic performance may further elevate the dollar, keeping federal funds rates high, thus presenting a headwind for bitcoin. As the Federal Reserve intends only two interest rate cuts in 2025, the dollar’s appreciation is likely to persist, affecting the trajectory of bitcoin alongside potential market volatility.

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