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Election 2024

Bitcoin Risks Deeper Drop if Dollar Rebounds

The bitcoin price could pull back even further should the dollar stage a full-blown recovery on the back of the latest Fed meeting.

By Omkar Godbole
AccessTimeIconAug 20, 2020 at 10:49 a.m. UTC
Updated Aug 19, 2021 at 3:48 a.m. UTC
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Bitcoin’s price pullback may worsen as the U.S. dollar shows signs of life on the back of the newly released minutes from July's Federal Reserve meeting.

  • The dollar index, which tracks the greenback's value against that of other reserve currencies, has jumped 1% to 93.000 in the past 24 hours – the biggest single-day rise in two months.
  • The U.S. dollar (USD) has picked up on the news the Federal Reserve is not planning on implementing controversial yield curve controls on bonds – something markets had been anticipating.
  • The correlation between bitcoin and the USD has been historically weak but has picked up in the past month as investors look for alternative safe-haven assets.
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    • CoinDesk data shows bitcoin rising from $9,000 to $12,400 in the four weeks up to Aug. 17 just as the dollar index declined from 97 to 92.
    • But in the past week and in the face of a strengthening dollar, bitcoin has fallen to around 11,780 – down 5% from the recent high of $12,400 it reached earlier this week.
    • Continued recovery in the U.S. dollar could yield further losses for bitcoin but a sustained dollar rebound still looks unlikely – interest rates will remain at rock bottom to stimulate the economy, increasing the chances that the Fed might be forced to more radical monetary measures.

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    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

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