US Dollar VS Bitcoin: DXY breaks above 100 US dollars and strengthens, while Bitcoin may face difficulties.

Key Points

• The US Dollar Index (DXY) broke through 100, indicating a stronger dollar and putting pressure on risk assets such as Bitcoin.
• Analysts warn that the continued rise of the DXY may have an adverse effect on cryptocurrencies, as the correlation between BTC and the DXY remains negative.
• The next movement of Bitcoin may depend on whether the DXY can hold above 100, or it may reverse, which will affect market sentiment at the end of the year.

According to BeInCrypto, after nearly three months of range-bound fluctuations, the US Dollar Index (DXY) has broken through the 100 mark, reaching its highest level since August, raising concerns in the risk asset market once again.

The strengthening of the US dollar raises questions among investors: is this merely a short-term technical rebound, or the beginning of a new round of liquidity tightening, which may put pressure on Bitcoin and the broader cryptocurrency market?

The US dollar enters a strong consolidation phase

According to TradingView data, the US dollar index (DXY) has broken through the 100 level, indicating a strong rebound for the dollar after several months of weakness since the third quarter. After the Federal Reserve maintained interest rates at its last meeting, the DXY briefly soared to 99.98, reaching a new high in two months.

Analyst Ted pointed out that a golden cross is forming on the DXY daily chart, a technical pattern that is typically associated with a sustained upward trend.

He commented: “The continued strength of the US dollar is not a good omen for the cryptocurrency market.”

At the same time, an expert from the X forum warned that as the DXY approaches a key level of resistance and the 200-day moving average, this could be a “significant test” for the current uptrend. This key area could determine the next round of movement.

Some analysts believe that this round of movement may be a technical retest before a potential reversal. According to another X user, the monthly structure of the US Dollar Index (DXY) suggests that a bearish retest may occur, indicating that a pullback may happen in the short term before the mid-term upward trend resumes.

Regardless of the short-term trend, the strong rebound of the US dollar has once again put psychological pressure on risk assets, including stocks and cryptocurrencies.

Bitcoin Faces Headwinds: Understanding the Correlation Between BTC and DXY

Historically, Bitcoin (BTC) has shown a negative correlation with DXY. When the dollar strengthens, risk appetite tends to weaken, which usually leads to a pullback in BTC prices. According to a chart shared on X, Bitcoin's trend has closely correlated with DXY over the past quarter, highlighting the negative correlation between BTC and DXY, which continues to influence macroeconomic sentiment.

According to Ted Pillows' data, the DXY has risen from 98 to nearly 99.7 since September, while Bitcoin has dropped over 12% and gold has declined about 6%.

Brett's analysis shows that the 100 level on the weekly chart of the Dollar Index (DXY) remains a key support level. The last time DXY rebounded from this level was in May 2025, when Bitcoin reached an all-time high, driven by a brief pullback of the dollar. While history may repeat itself, the risk of an opposite outcome remains quite high if the current recovery momentum of the dollar proves to be more sustained.

(DXY Analysis | Source: Brett)

Another trader emphasized that the next major movement of Bitcoin may depend on the trend of the DXY: if the dollar breaks above 101, Bitcoin may continue to decline; conversely, if the DXY fails to hold the 100 area, it could signal a short-term rebound in the cryptocurrency market.

The correlation between Bitcoin and DXY remains one of the most important macro indicators for traders and investors. As the dollar strengthens, Bitcoin's short-term rise may face resistance. However, if the upward momentum of the dollar index (DXY) weakens, cryptocurrencies may regain their footing before the end of the year, once again proving that macro trends, rather than just on-chain dynamics, dictate the rhythm of digital assets.

Dollar VS Bitcoin

The US dollar (USD) and Bitcoin (BTC) represent two distinctly different monetary systems: the US dollar is a traditional fiat currency controlled by central banks; whereas Bitcoin is a decentralized digital asset. Each has its advantages and disadvantages, depending on the use case, goals, and personal preferences.

Advantages and disadvantages of ### US dollars (USD)

The US dollar is the world's primary reserve currency, supported by a strong traditional financial system.

Advantages:

• Stability and Trust: As a global reserve currency, the US dollar is backed by the credit of the US government, has relatively low volatility (especially in the short term), and is widely accepted and trusted in global trade and finance.
• Extremely High Liquidity: The US dollar is the most liquid currency in the world. It can be used to purchase goods and services with fiat currency anytime and anywhere, and the trading depth is excellent.
• Legal Status and Compliance: The US dollar is legal tender, protected by law, and all economic activities revolve around it, safeguarded by a regulatory system.
• Government Control and Macroeconomic Regulation: The Federal Reserve can respond to economic recessions and control inflation through monetary policy (such as interest rate hikes and quantitative easing) for macroeconomic regulation.

Disadvantages:

• Centralized Control: The Federal Reserve can issue currency at will, which leads to inflation and will dilute the wealth of holders in the long term.
• Review and Control Risks: Traditional banking systems are centralized, and users' funds may be frozen, confiscated, or subject to transaction review (such as sanctions) by the government.
• Transaction Speed and Cost: Cross-border payments typically take several days and involve high bank fees and intermediary costs.

Advantages and Disadvantages of Bitcoin (BTC)

Bitcoin is a decentralized digital asset that represents a new paradigm of financial innovation.

Advantages:

• Decentralization and Censorship Resistance: Bitcoin is not controlled by any government, bank, or single entity. Transactions are peer-to-peer and censorship-resistant, meaning that funds cannot be arbitrarily frozen or confiscated.
• Inflation Resistance (Scarcity): The total supply of Bitcoin is capped at 21 million coins, which gives it a strong sense of scarcity. Its issuance rate is controlled by code and cannot be arbitrarily increased, making it a long-term store of value against fiat currency inflation (“digital gold”).
• Transparency: All transactions are recorded on a public blockchain ledger, accessible to anyone (though identities are pseudonymous), ensuring a high level of transparency.
• Global Instant Settlement: Cross-border payments can be completed almost in real-time, with fees typically lower than traditional bank remittances (especially when using Layer 2 solutions like the Lightning Network).

Disadvantages:

• High Volatility: Bitcoin prices fluctuate greatly, heavily influenced by market sentiment, regulatory news, and macroeconomic factors. This poses challenges for its use as a medium of exchange and a stable store of value.
• Regulatory Uncertainty: Bitcoin's legal status varies across the globe, and the regulatory environment is still evolving, posing policy risks.
• Technical Barrier: Using and storing Bitcoin (managing private keys, ensuring wallet security) requires a certain level of technical knowledge, and operational errors may lead to permanent loss of funds.
• Scalability Limitations: The transaction speed of the Bitcoin mainnet is relatively slow (processing only a few transactions per second), and transaction fees can be very high during network congestion.