Bitcoin News Today: Dollar Weakness Fuels Bitcoin Hopes But Macro Risks Delay $120K Target

Dollar weakness has recently fueled optimism for Bitcoin’s potential price recovery, but lingering macroeconomic risks suggest a path to $120,000 may still be distant. Bitcoin has long shown an inverse correlation with the U.S. Dollar Index (DXY), which measures the greenback’s strength against a basket of major currencies. A weaker dollar often supports risk-on environments, which can benefit Bitcoin. However, traders are cautious about whether dollar weakness alone is enough to drive BTC beyond $120,000 without broader macroeconomic clarity [2].

Bitcoin’s recent drop below $114,000 coincided with the DXY hitting a two-month high, signaling renewed concerns about stagflation and shifting investor sentiment. By early August, the DXY had fallen to 98.5 after failing to reclaim the 100 level, a move linked to weaker-than-expected U.S. employment data that heightened expectations of aggressive Federal Reserve rate cuts. As the dollar weakens, market participants are watching if Bitcoin can regain key resistance levels and build momentum toward its previous high [2].

Despite the weaker dollar, Bitcoin’s near-term gains have been constrained by rising trade tensions and fears of a global economic slowdown. The U.S. has imposed new import tariffs on several trade partners, which could elevate domestic inflation and create additional pressure on monetary policy and investor behavior [2]. Historical patterns also show that during the 2024 period when the DXY dropped from 106 to 101, Bitcoin struggled to stay above $67,000 and eventually fell to $53,000 by early September. This indicates that even in a weaker dollar environment, Bitcoin’s price performance is not guaranteed to trend upward [2].

Analysts often use the ICE BofA High Yield Option-Adjusted Spread as a proxy for market risk appetite. A higher spread signals increased caution, while a lower spread suggests investors are more willing to take on risk. In late 2024, the spread spiked alongside falling Bitcoin prices, but by late July 2025, it had dropped to 2.85, aligning with Bitcoin’s recovery from a low of $74,500 in April. This highlights how improving credit sentiment can provide a tailwind for risk assets like Bitcoin [2].

Currently near 3, the spread is close to its 200-day moving average, suggesting the market remains in a relatively neutral state. A rise in the spread could prompt investors to shift capital toward short-term U.S. Treasurys or foreign assets, which may further weaken the dollar but also indicate growing economic caution [2]. For now, the DXY’s recent decline does not clearly signal a strong upward trajectory for Bitcoin, as ongoing uncertainties in U.S. labor conditions and global trade tensions continue to cloud the macroeconomic outlook [2].

Traders are now monitoring Bitcoin’s ability to hold above $115,300 as a potential precursor to a move toward $120,000 to $126,000. However, without a stronger macroeconomic environment, the road to $120,000 is likely to remain challenging [1].

Source:

[1] BTC Structure Update (August 5) The classic Accumulation ...

https://www.facebook.com/groups/2820159****72964/posts/btc-structure-update-august-5the-classic-accumulation-manipulation-distribution/4051025995153007/

[2] Dollar weakness boosts Bitcoin hopes, but macro risks could delay $120K ...

https://cointelegraph.com/news/dollar-weakness-boosts-bitcoin-hopes-but-macro-risks-could-delay-120k-target