The dollar regains ground and Bitcoin retreats

The leading cryptocurrency is challenging the dollar's strength, as analysts debate its future and traders look for the perfect moment.

The cryptocurrency market is at an inflection point, with Bitcoin (BTC) experiencing a 1.60% decline to trade at $107,200 at the time of this report. This slight correction comes amid a recovery in the US dollar, which traditionally puts downward pressure on the largest cryptocurrency by market capitalization. However, technical analysis and overall market sentiment suggest this could be a strategic pause in a broader uptrend.

Bitcoin remains above key support at $107,000 and, crucially, above the 50- and 200-period exponential moving averages (EMA50 and EMA200) / Tradingview

The dollar strengthens and Bitcoin feels the impact

Bitcoin's recent decline directly correlates with the rebound in the Dollar Index (DXY), which rose to 99.7 on Wednesday, extending a gain of nearly 0.4% from the previous session. Financial operators are waiting for new catalysts while closely monitoring trade tensions and fiscal developments under the Trump administration. The dollar's strength often acts as a counterweight to Bitcoin, as investors may opt for safer or more traditional assets during times of global economic uncertainty.

The Dollar: Sustainable Recovery or Temporary Rebound?

Despite this recent rally, the dollar remains near its 2023 lows, reached in April, and has fallen more than 7% so far this year. Doubts about the dollar's position as the global reserve currency, although present, appear to be overblown. Analysts at IKB Deutsche Industriebank state in a note that "neither the euro nor the Chinese yuan offer plausible alternatives," highlighting the lack of solid alternatives. The United States continues to hold the highest credit rating compared to the eurozone and China, despite Moody's recent downgrade of US government debt.

Bitcoin Open Interest and Technical Analysis

Bitcoin's open interest (OI) remained virtually unchanged, declining only -0.38% to $78.08 billion. Although slightly below its most recent all-time high of $80.13 billion, the stability of OI in recent days shows a slight recovery, allowing Bitcoin to remain solidly above the $107,000 support.

From a technical perspective, Bitcoin remains above the key support at $107,000 and, crucially, above the 50- and 200-period exponential moving averages (EMA50 and EMA200), reinforcing a clear bullish sentiment. The current downward movement is occurring with low trading volume, an indicator that suggests selling pressure is weak and that the correction could be temporary. If Bitcoin were to lose support at $107,000, the next level to test would be $100,000.

Opportunity in the Expansion: The Trader's Strategy

The Bitcoin market appears to be in an "expansion" phase, a period in which experienced traders identify pullbacks as strategic opportunities to enter and join the prevailing uptrend. The low intensity of selling during the recent decline reinforces the idea that Bitcoin's bullish fundamentals remain intact.

Outlook

Despite the momentary strength of the dollar, Bitcoin is demonstrating resilience by holding its key support levels and maintaining bullish technical sentiment. The current consolidation phase could be an opportunity for investors looking to capitalize on the cryptocurrency's long-term growth trend. The market remains attentive to macroeconomic movements, but conviction in Bitcoin appears to remain strong.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investing in cryptocurrencies carries significant risks. Consult a financial professional before making any investment decisions.