- The US dollar index has risen to 109, the highest level since November 2022
- A strong dollar could weaken demand for risky assets like Bitcoin, which could limit the crypto’s upward trend
Bitcoin (BTC) By mid-December it fell below $100,000. Since then, the King Coin has struggled to regain its momentum on the charts. At the time of writing, BTC was trading at $96,789 after gaining 1.5% in 24 hours, while the crypto was still just over 10% off its ATH.
While Bitcoin could stage a recovery later this month thanks to Donald Trump’s inauguration As US president, two key factors could continue to weigh on prices.
The US dollar index rises to its highest level in two years
The US Dollar Index (DXY), which measures the performance of the US dollar against major currencies, has risen to 109 – the highest level since November 2022. What this rise indicates is that the US dollar has been gaining strength lately .
(Source: MarketWatch)
The DXY is inversely correlated with the price of Bitcoin, meaning that a rise limits the coin’s upside potential. Furthermore, a stronger dollar tends to weaken demand for risky assets like cryptocurrencies.
In fact, the decline in demand is already clearly visible in the exchange-traded fund (ETF) market. On its first day of trading in 2025, the BlackRock iShares Bitcoin Trust (IBIT) ETF recorded outflows of $332 million, marking the highest outflows in history. The total outflows from all 11 Bitcoin ETFs amount to $242 million SoSoValue.
If these outflows continue, it could cause a surge in selling pressure. This in turn will cause a downward trend for BTC on the charts.
Rising stablecoin supply ratio
The weakened demand seemed to be visible not only among institutional investors, but also in the private market. For example, according to CryptoQuant, Bitcoin’s Stablecoin Supply Ratio (SSR) rose to 17 – the highest level in seven days.
(Source: CryptoQuant)
A higher ratio means that the supply of stablecoins is low compared to the market capitalization of BTC. This results in low buying pressure that could put downward pressure on the price.
Bitcoin’s fear and greed index is still bullish
Despite market factors indicating declining demand and purchasing pressure, the Fear and Greed Indexwhich gauges market sentiment revealed that traders are still bullish.
This index had a value of 74 at the time of writing, which indicates that most traders are optimistic about BTC’s price movement. Since the index rose from 65 earlier this week, it could be good news for BTC if traders start buying.
However, if buy-side pressure is not enough to absorb the coins sold, it could limit chart gains.