Bitcoin Plays Chicken With Central Banks As Dollar Falls: Expert
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Bitcoin’s price continued another volatility over the weekend, down 5% on Sunday, below the $80,000 mark before settling close to $82,000. The latest decline has put the cryptocurrency below its all-time high of $109,900. Analysts attribute the downturn to ongoing trade tensions that are linked to President Donald Trump’s latest tariff measures and fears for an imminent recession.
Meanwhile, the dollar index (DXY) has weakened since mid-January, which fell from 110 to 103, coincides with Trump’s second term and may be a potential bullish catalyst for Bitcoin prices. A series Posts On X, Realvision’s chief crypto analyst Jamie Coutts provides the current market environment, highlighting two key metrics that can shape central bank policies and extending the trajectory of Bitcoin. “Bitcoin is like playing chicken games with the central bank,” Kutz wrote.
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He explained that despite the recent decline in the U.S. dollar supports Bitcoin’s bullish framework, the rise in bond bonds (tracked by mobile index) and widening corporate bonds have attracted attention: Coutts highlights the role of U.S. Treasury as a global core asset. He believes any spikes of volatility force lenders to impose larger hairstyles on collateral, thereby tightening liquidity. “As the rise in volatility forces lenders to apply hairstyles on collateral, tightening liquidity. (…) Above 110 (mobile index), I doubt there will be some concerns at the central planner level.”
Real vision macro and liquidity dashboard | Source: x @jamie1coutts
The spread of U.S. investment-grade corporate bonds has been widening over the past three weeks, and the COUTTS shift is seen as a signal that risky assets, including Bitcoin, may be under pressure: “This suggests that the demand for maintaining yields is fading relative to the Treasury, and further expansion may be a negative growth for risky assets.”
Despite these warning flags, Coutts remain optimistic about the medium-term outlook for Bitcoin, mainly due to The US dollar’s “rapid decline”. He noted that the decline in the US dollar in March (one of the most important monthly declines in 12 years) historically coincided with the bullish turning point of Bitcoin prices. According to his research, “they all occur in the Bitcoin bear market trough (turning point) or the medium-term bull market (trend continuation).
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COUTT acknowledges that Bitcoin has limited historical data sets, but he believes he thinks it can drive higher digital assets:
Adoption of nation-states: “Global Nation-state Race Coutts wrote that a situation is described in which states include Bitcoin in strategic reserves or strengthen mining efforts.
Company Accumulation: He pointed out the possibilities of the company – especially Strategy (MST)- Added 100,000 to 200,000 BTC this year.
ETF Positions: Exchange-traded funds may “double” further boost institutional inflows.
Fluidity Dynamics: In Kutz’s words, “The fragrance must flow.”
Coutts also mentioned that Bitcoin seems to be “filling a big gap” and reiterated his view that a slideshow of up to $70,000 will mark a fundamental market change. Meanwhile, he believes central banks are getting closer to possible interventions as treasury volatility and credit differences climb: “If treasury volatility and bond spreads continue to rise, asset prices will continue to fall. At the same time, this may prompt central planners to take action.”
Bitcoin liquidity gap | Source: x @jamie1coutts
At the end, Coutts briefly summarizes why he thinks Bitcoin effectively locks in the showdown with the central bank: “Think of Bitcoin as a high-risk chicken game with central planners. As their choices are reduced, and assuming that the Hodlers still don’t have the grasp, there are more and more odds against Bitcoin owners.”
At present, the world’s largest cryptocurrency appears to be stepping on the line between macroeconomic headwinds (all in a turbulent bond market, all within the weaker dollar range, and the dollar is weak. Whether Bitcoin continues to retreat or resume its long-term rise may depend on how global policymakers cope with increasing pressure on bond markets and whether holders are ready to continue playing with “chicken” with central planners.
At press time, BTC was trading at $82,091.
BTC Price, 1 Week Chart | Source: btcusdt on TradingView.com
Featured Images created with dall.e, Charts for TradingView.com
