The US dollar faces increased appreciation pressure, and the crypto market is facing new challenges

The US Dollar Index rose 0.26% on January 9th, closing at 98.936. Behind this seemingly modest increase is a comprehensive appreciation of the dollar against six major currencies. For the crypto market, a strengthening dollar often signals a shift in capital flows, and this signal warrants attention.

Specific manifestations of the dollar’s appreciation

According to the latest news, by the close of the New York forex market, the dollar’s gains and losses against major currencies are as follows:

Data shows that the dollar has weakened against major European currencies (euro, pound) but has significantly appreciated against safe-haven currencies like the yen and Swiss franc. This divergence reflects market expectations for the dollar and safe-haven assets.

Why this matters to the crypto market

Dollar appreciation typically triggers several chain reactions:

• Risk assets under pressure: When the dollar, as the global reserve currency, appreciates, investors tend to hold more dollars rather than risk assets, including cryptocurrencies like Bitcoin and Ethereum.
• Liquidity shift: Funds may flow from the crypto market into dollar-denominated assets such as U.S. Treasuries, seeking higher risk-free returns.
• Emerging market pressure: Dollar appreciation puts pressure on emerging markets, where crypto investors may face risks of local currency depreciation.

Current market context

The dollar index at 98.936 is approaching the high levels seen in 2024. From a technical perspective, the dollar remains relatively strong. This is related to multiple factors, including the global economic situation and Federal Reserve policy expectations.

My personal view is that in the short term, dollar strength could exert pressure on crypto assets. However, this also depends on other variables, such as the Fed’s policy direction and changes in global risk sentiment. Crypto market participants should closely monitor the dollar index’s movements and its correlation with Bitcoin prices.

Summary

Dollar appreciation is not a new phenomenon, but a 0.26% single-day increase indicates the market is re-pricing the dollar. For crypto investors, this serves as a reminder: macroeconomic environments are changing, and during periods of dollar strength, crypto assets may face greater adjustment pressures. Moving forward, attention should be paid to whether the dollar index continues to appreciate and how this impacts mainstream cryptocurrencies like Bitcoin.