As Bitcoin nears the $100,000 mark, analysts caution that a stronger U.S. dollar could limit its growth.
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André Dragosch, Head of European Research at Bitwise, highlighted thatBitcoinhas historically struggled during periods of dollar strength, which signals tighter global liquidity. The U.S. Dollar Index has recently risen, and Bitwise’s models now indicate that the dollar is the key factor affecting Bitcoin’s performance.
Additionally, the U.S. Federal Reserve’s monetary policy is supporting the dollar, reducing expectations of rate cuts in 2024.
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This creates an environment less favorable for Bitcoin, which thrives in more liquid conditions. Global developments, like potential interest rate hikes by the Bank of Japan, could further pressure Bitcoin by unwinding the yen carry trade.
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With inflation in Japan rising and the BOJ signaling tighter policy, the global tightening trend could make Bitcoin’s climb to $100,000 more challenging in the short term. Analysts suggest that while Bitcoin remains resilient, its performance in the near term will depend on how central banks globally manage liquidity.
If the dollar strengthens further and other global central banks follow suit, Bitcoin’s path to new highs could be delayed as investors shift towards more traditional assets that are perceived as safer in a tightening environment.
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