Can Bitcoin Thrive Amid a Strengthening Dollar?

Jamie Coutts, a leading crypto strategist at Real Vision, has expressed concerns about the US dollar's rising strength and its potential impact on Bitcoin's short-term performance.

While remaining optimistic about Bitcoin’s long-term trajectory, Coutts cautions that the immediate outlook could be clouded by the dollar’s upward momentum, which often works against riskier assets like cryptocurrencies.

The macro backdrop has soured. Dollar strength is not good for Bitcoin. Ann Funding rates hit 40% 2 days ago. My liquidity framework is sensitive to the short to medium-term changes in momentum. In the long term, the picture is Bullish; in the Short term, they suggest caution.… pic.twitter.com/KUD7rLDKXQ

— Jamie Coutts CMT (@Jamie1Coutts) November 14, 2024

Coutts draws attention to the dollar index (DXY), which compares the USD against a basket of major global currencies. The DXY is currently nearing a critical resistance level of 106, and a breakout above this threshold could create headwinds for Bitcoin and other digital assets. According to Coutts, this dynamic signals caution for traders in the short term, even as Bitcoin maintains a broader bullish structure.

Despite these near-term challenges, Coutts underscores Bitcoin’s strong relationship with global liquidity, a measure of the total money circulating in the global economy. He believes that as the M2 money supply expands, Bitcoin is positioned for substantial gains over the next one to two years.

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He also notes that Bitcoin’s growth is unlikely to follow a straightforward, linear pattern. Instead, the cryptocurrency could achieve far greater heights than many currently predict, fueled by macroeconomic shifts and increased liquidity in the financial system. For Coutts, the current cycle offers significant upside potential, even if short-term volatility persists.

Kosta Gushterov