Bitcoin (BTC) has dipped below $122,000 as a rise in the U.S. dollar has squeezed liquidity, impacting overall market sentiment. This decline follows an impressive surge above $126,000 earlier in the week.

Economic Pressures on Digital Assets

Market analyst Jamie Coutts has indicated that this downturn is driven more by macroeconomic trends rather than inherent weaknesses in Bitcoin. He stated, > “Bitcoin’s dip isn’t mysterious — it’s macro,” highlighting a rebound in the U.S. Dollar Index (DXY), which is approaching a vital resistance range of 100-101 after experiencing its steepest decline in decades.

Coutts elaborated that the dollar’s resurgence is tightening liquidity on a global scale, creating short-term pressure on higher-risk assets like BTC.

Coutts concluded with a critical inquiry: “The real question: is this the start of a new dollar cycle or just the setup for the next leg lower?” He maintains an optimistic outlook, projecting that liquidity will remain positive, bolstering risk assets into mid-2026.

Recent data corroborates this analysis. On October 9, Arab Chain, a market technician from CryptoQuant, reported a 7.9% drop in open interest on Binance, indicating that traders are adopting a more cautious stance by closing leveraged positions. This trend often precedes a market consolidation period, suggesting that the recent price increase was sustained by speculative trading that is now declining.

Regional Impacts and Market Conditions

A publication by CryptoQuant hinted that the direction of Bitcoin will largely depend on the liquidity shifts between American and Asian markets. Their assessments reveal that the Coinbase Premium Index remains slightly favorable, indicating consistent institutional demand, while metrics of the Kimchi Premium in Korea reflect limited retail activity.

Current on-chain statistics appear balanced. Market watcher Axel Adler Jr. noted the Puell Multiple is at 1.1 with Bitcoin around $121,600, suggesting miners are operating just within profitability margins.

Adler remarked: “The risk of capitulation is low, but there’s no overheating like at cycle peaks.”

As of the latest updates, Bitcoin trades near $121,422, marking a 0.4% decrease in the past day but a 1.2% increase over the week, maintaining an impressive year-on-year growth of nearly 99%, as reported by CoinGecko. Most analysts, including Coutts, remain hopeful that liquidity support and an improving economic cycle will foster a constructive outlook for Bitcoin in the upcoming months.