Dollar's Rally Mimics Trump's Initial Term: A Look by Van Straten
The DXY index has risen over 3% since the recent election, mirroring patterns observed during Trump's first presidential term.
Overview
- The dollar and bitcoin saw significant gains after the U.S. presidential election in November.
- The dollar's current rally is comparable to its performance following Trump's earlier victory in 2016.
- Continued dollar strength, supported by Trump's policies and the Federal Reserve's anticipated interest rate decisions, may impact bitcoin's price trajectory in upcoming months.
Detailed Insights
Since Donald Trump’s decisive election victory, the dollar has surged more than 3% against competing currencies. This pattern echoes what followed his first win in 2016.
Previously, the DXY Index, measuring the dollar's value against a basket of major trading partners, peaked in December, coinciding with the 2017 bitcoin surge. This time around, indications suggest the index may not taper off soon, bolstered by Trump's economic policies and likely Federal Reserve actions.
If the dollar continues to climb, it may hinder bitcoin's momentum, which has seen substantial gains post-election. Andre Dragosch of Bitwise commented on the tension between the Federal Reserve's potential actions and economic outcomes, noting the difficulty in balancing inflation and recession risks.
Trump's intent to impose tariffs could lead to heightened geopolitical uncertainty, further driving demand for the dollar during turbulent times. The U.S. economic landscape shows resilience, with over 3% GDP growth and inflation remaining above targets, leading to two expected interest rate cuts in 2025.
Overall, the current dollar strength poses challenges for risk assets, yet the incoming president's support for bitcoin could lead to unforeseen developments in the crypto market.
