Bitcoin Faces Renewed Headwinds as Dollar Strength Dominates, Analyst Warns
Amsterdam, November 21, 2024 – Bitcoin is once again experiencing downward pressure, but the source of the turbulence isn’t internal to the crypto market, according to market analyst jamie Coutts.Instead, he attributes the recent dip to the continued strength of the U.S. dollar and its impact on global liquidity. Coutts argues that a robust dollar surroundings inherently restricts the capital available for risk-on assets like bitcoin,creating a challenging landscape for crypto investors.
The core of Coutts’ analysis centers on the dollar’s role as an indicator of global money supply. A strengthening dollar signifies reduced liquidity, which subsequently dampens investment appetite, especially for volatile assets. This dynamic, he explains, has historically correlated with Bitcoin’s price movements.
Coutts highlights a clear inverse relationship, visually demonstrated in a graph he shared on X (formerly Twitter) on November 19, 2024. https://x.com/Jamie1Coutts/status/1991261439299056123? “When the dollar rises, bitcoin falls. When the dollar falls, Bitcoin rises again,” he observes. The recent surge in the dollar’s value directly coincides with the current decline in Bitcoin’s price, reinforcing his belief that broader macroeconomic forces are currently dictating the cryptocurrency’s trajectory.
Beyond the dollar’s influence,Coutts expresses skepticism regarding the effectiveness of potential interventions by the Federal Reserve,such as interest rate cuts or liquidity injections. He believes the market lacks confidence in these measures to alleviate the existing pressure. “The market will ultimately impose itself when the central bank must intervene,” Coutts warns, suggesting the Fed may be forced to act if conditions deteriorate further.
Ultimately, Coutts emphasizes that liquidity remains paramount. As long as the flow of money within the system remains constrained, investors should anticipate continued volatility in the crypto market. He succinctly summarizes the situation with a quote echoing a core principle of resource management: “The Spice Must Flow.”
