The rise of the dollar these days pressures the cryptocurrency market and drives it down
The rise of the dollar... how does it affect digital currencies?
When the US Dollar Index (DXY) rises, it has a direct negative impact on the cryptocurrency market. Cryptocurrencies are considered "alternative assets" that investors usually turn to when the dollar weakens or inflation rates rise. However, with the strength of the dollar, safe assets like the dollar and US bonds become more attractive, prompting many to pull liquidity from high-risk assets like Bitcoin and Ethereum.
In recent days, we have seen a rise in the dollar index close to its highest levels in months, driven by the Federal Reserve's statements about keeping interest rates high for a longer period. The result? A clear drop in the market capitalization of digital currencies and a decline in investors' risk appetite.
The rise of the dollar does not mean the end of the bull market, but it is an indicator of temporary shifts in market behavior. The smart investor closely monitors the movements of the dollar as it is key to understanding upcoming market trends.
