Strengthening US Dollar Could Bring Further Downside for Bitcoin

With the U.S. dollar eyeing a pre-election recovery, the path of least resistance for bitcoin may be to the downside.

AccessTimeIconSep 24, 2020 at 11:26 a.m. UTC
Updated Sep 14, 2021 at 9:59 a.m. UTC
Consensus 2023 Logo
Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28.
Consensus 2023 Logo
Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28.

The U.S. dollar is showing signs of life and a continued breakout could weigh over bitcoin, which surged amid the greenback's sharp sell-off this summer.

  • The top cryptocurrency by market value is currently trading at $10,320 – up nearly 2% from Wednesday's low of $10,140, according to CoinDesk's Bitcoin Price Index.
  • However, the relief rally could be short-lived, as the dollar index (DXY), which tracks the greenback's value against major fiat currencies, has broken above its two-month-long range of 92.00–94.00.
  • "Bitcoin will likely follow further downside together with precious metals given the DXY breakout," Matthew Dibb, co-founder and COO of Stack, a provider of cryptocurrency trackers and funds, told CoinDesk.
CoinDesk - Unknown

BTC and DXY daily charts

  • "Bitcoin, like gold, is inversely correlated to the dollar," Max Keiser, a broadcaster and finance analyst tweeted on Tuesday.
  • Indeed, bitcoin and the dollar index have moved in opposite directions since March, with the apparent inverse correlation becoming more noticeable since mid-July.
  • The DXY is looking north following Wednesday's breakout and is currently hovering near 94.40.
  • "The dollar has been very heavy since March on the back of Federal Reserve's easing, and we expect to see some profit-taking [in dollar shorts] across the board," said Darius Sit, CEO of Singapore-based QCP Capital.
  • As such, there's a risk bitcoin may fall to the psychological support of $10,000.
  • Gold has already declined to a two-month low of $1,860, tracking the dollar strength.
  • "A break below $10,000 support could mean a further drop to $8,800," Stack's Dibb said.
  • However, on-chain analyst Willy Woo doesn't foresee a mega bump. "While I've heard talk of bearishness down to even [$7,000], I don't see fundamentals supporting this as a likely event," he tweeted Wednesday.
  • If stock markets rebound sharply, the haven demand for the U.S. dollar will likely weaken, potentially allowing a notable recovery in bitcoin and gold.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to to register and buy your pass now.