Strong Dollar Rally Puts Pressure on Bitcoin (BTC)
Last week, the U.S. dollar defied multiple bearish factors and staged a surprising rebound, exerting persistent pressure on Bitcoin (BTC).
CPI Data Fails to Weaken the Dollar:
- Despite cooling inflation pressures in the U.S. CPI report, the dollar dipped only slightly.
- Bitcoin traded sideways with minimal movement.
PPI & Jobless Claims Ignored:
- April’s PPI rose 2.3% YoY—missing expectations and marking the lowest since February 2021.
- Initial jobless claims reached 264K, the highest since October 2021.
- Yet, the dollar surged post-data release.
Consumer Sentiment Adds Fuel:
- The University of Michigan’s consumer sentiment index plunged to 57.7.
- However, long-term inflation expectations unexpectedly climbed from 3.0% to 3.2%, further boosting the dollar.
Hawkish Fed Comments & Market Reaction
- Minneapolis Fed President Kashkari hinted at prolonged monetary tightening.
- FedWatch Tool showed unchanged rate hike expectations—June odds remained steady post-NFP.
Weekly Impact:
- The dollar index surged 1.4%, its strongest gain since September 2022.
- Risk appetite waned amid U.S. debt ceiling concerns, leaving Bitcoin without support.
👉 Why Bitcoin Remains Resilient Despite Macro Pressures
Bitcoin (BTC) Technical Analysis: Head-and-Shoulders Pattern Fails (For Now)
Daily Chart Breakdown:
Key Support Zone (26700-27000):
- Briefly breached on Friday but swiftly recovered via a V-shaped reversal.
- This nullifies the bearish head-and-shoulders setup—for now.
Potential Rebound Targets:
- 27500 (immediate resistance).
- 28000 (next psychological barrier).
What If Support Fails?
- A confirmed breakdown below 26700 could trigger a steep downtrend.
FAQ Section
Q1: Why did Bitcoin hold steady despite dollar strength?
- Bitcoin’s resilience stems from accumulation by long-term holders refusing to sell at lower prices.
Q2: What’s the significance of the 26700-27000 support zone?
- This area represents a liquidity cluster where buy orders historically pile up, preventing deeper drops.
Q3: Could the Fed’s policies push BTC lower?
- Higher interest rates typically pressure risk assets, but Bitcoin’s scarcity narrative may offset macro headwinds.
Q4: Is the U.S. debt ceiling crisis affecting BTC?
- Yes—market uncertainty reduces speculative inflows, but BTC often decouples during extreme fiat stress.
👉 How Traders Are Navigating Bitcoin’s Critical Support Levels
Key Takeaways:
- The dollar’s strength remains Bitcoin’s primary headwind.
- Technical structure leans neutral unless 26700 breaks decisively.
- Watch macroeconomic cues (debt ceiling resolution, Fed rhetoric) for directional signals.