$BTC A political figure once said something thought-provoking: "Judging the bull market based on Bitcoin's short-term rise is an inaccurate opinion." This statement points to an important point: a true bull market is a large long-term trend, not the fluctuations of a candle chart over a few days.
By reviewing past market performance, we can clearly see some patterns:
In the bull market of 2017, the dollar index fell from 103 to below 90, while at the same time, Bitcoin prices rose from $1,000 to nearly $20,000.
During the bull market from 2020 to 2021, the value of the dollar was affected by the pandemic, as the dollar index fell from 103 to 90, while the price of Bitcoin rose from over $10,000 to $69,000.
In comparison, in the bear market of 2022, the Federal Reserve significantly raised interest rates, causing the dollar index to rise to its highest level in 20 years (114), which resulted in the price of Bitcoin dropping below $20,000.
The logic behind this phenomenon is very simple:
When there is a strong dollar cycle (interest rate hikes, capital returning to the United States), money flows out of emerging markets, and risk assets come under pressure, thus weakening cryptocurrencies like Bitcoin.
Conversely, during a weak dollar cycle (interest rate cuts, dollar depreciation), global money seeks high returns, leading to an abundance of liquidity, and often assets like gold, U.S. stocks, and Bitcoin move together.
Currently, the Federal Reserve has shifted from a very tight policy to a moderation, although the dollar index remains at high levels, the overall situation has entered a downward volatility channel. This means, from a macro environment perspective, that Bitcoin is in a positive context in the medium and long term.
Therefore, investors should not doubt due to short-term price fluctuations. The bull market has not ended, but only the rhythms differ. Understanding this relationship between macroeconomics and the cryptocurrency market helps us better exploit investment opportunities and avoid falling into the trap of short-term volatility.
