Bitcoin – How USD’s strength, low stablecoin supply could dictate price action

• U.S greenback index has surged to 109, marking its highest stage since November 2022
• A robust greenback may weaken the demand for danger belongings comparable to Bitcoin, which may restrict the crypto’s uptrend 

Bitcoin (BTC) fell under $100,000 in mid-December. Since then, the king coin has struggled to regain its momentum on the charts. At press time, BTC was buying and selling at $96,789 following positive aspects of 1.5% in 24 hours, with the crypto nonetheless simply over 10% shy of its ATH.

Whereas Bitcoin may stage a restoration later this month because of Donald Trump’s inauguration as U.S President, two key components may proceed to weigh on the worth. 

U.S greenback index soars to two-year highs

The U.S greenback index (DXY), which measures the efficiency of the U.S greenback in opposition to main currencies, has surged to 109 – its highest stage since November 2022. What this hike signifies is that the U.S greenback has been gaining power these days.

(Supply: MarketWatch)

The DXY is inversely correlated with Bitcoin’s worth, which means {that a} hike limits the coin’s upside potential. Moreover, a stronger greenback tends to weaken the demand for danger belongings comparable to cryptocurrencies. 

In actual fact, the autumn in demand is already evident within the exchange-traded fund (ETF) market. On the primary day of buying and selling in 2025, the BlackRock iShares Bitcoin Belief (IBIT) ETF recorded $332M in outflows, marking its highest outflows in historical past. The entire outflows from all 11 Bitcoin ETFs hit $242M, as per SoSoValue.  

If these outflows persist, it may gas a surge in sell-side strain. This can, in flip, gas a downtrend for BTC on the charts. 

Rising stablecoin provide ratio

The weakened demand appeared not solely evident amongst institutional traders, but additionally within the retail market. As an illustration – Based on CryptoQuant, Bitcoin’s Stablecoin Provide Ratio (SSR) surged to 17 – Its highest stage in seven days.

(Supply: CryptoQuant)

A better ratio signifies that the provision of stablecoins is low, in comparison with BTC’s market cap. This ends in low shopping for strain that would exert downward strain on the worth. 

Bitcoin’s concern and greed index continues to be bullish

Regardless of market components pointing to lowering demand and shopping for strain, the Fear and Greed Index, which measures the market sentiment, revealed that merchants are nonetheless bullish. 

This index had a worth of 74 at press time, suggesting that the majority merchants are optimistic about BTC’s worth motion. For the reason that index climbed from 65 earlier this week, it may very well be excellent news for BTC if merchants begin shopping for.

Nevertheless, if the buy-side strain isn’t sufficient to soak up the offered cash, it may restrict the positive aspects on the charts.