Bitcoin Reclaims $85,000 as DXY Declines Post-FOMC

The US Dollar Index (DXY) experienced a decline following the latest Federal Open Market Committee (FOMC) meeting. This event sparked discussions about its implications for Bitcoin (BTC) and broader liquidity conditions. Bitcoin's price reclaimed the $85,000 range, but prospects for further gains remain uncertain as the cryptocurrency continues to trade sideways.
Market analysts and crypto experts suggest that the declining dollar could create a more favorable environment for Bitcoin’s price recovery. This optimism comes despite lingering macroeconomic concerns. The FOMC rejected further interest rate cuts and made significant downward revisions to its 2025 economic projections, painting a picture of weaker growth and persistent inflation. The Fed cut its GDP growth forecast from 2.1% to 1.7% while raising its unemployment projection to 4.4%. Inflation expectations also increased, with PCE inflation forecasted at 2.7% and core PCE inflation at 2.8%. These revisions suggest a more challenging economic environment, with the DXY dropping in the aftermath.
Real Vision’s chief crypto analyst argued that quantitative tightening (QT) is effectively dead for the near future. The analyst pointed to the decline in Treasury yield volatility and its correlation with the DXY downturn, indicating increased liquidity, which is generally bullish for Bitcoin. However, not everyone agrees on the extent of QT’s slowdown. Another analyst cautioned that QT is still ongoing, albeit at a reduced pace.
One of the most compelling arguments for Bitcoin’s potential recovery comes from VanEck’s Head of Digital Assets Research. He points out that Bitcoin has historically tracked an inverted DXY on a 10-week lag. This suggests that the current downturn in BTC prices could be a delayed reaction to the strong dollar in late 2024. If the pattern holds, the recent weakness in DXY could set the stage for a bullish phase in Bitcoin over the coming months.
Meanwhile, BitMEX co-founder Arthur Hayes is more cautious about Bitcoin’s trajectory. While he acknowledges that QT is slowing, he questions whether liquidity injections in the European Union—driven by military spending—could overshadow the US’s financial shifts. Hayes also speculated that Bitcoin’s recent drop to $77,000 might have marked the bottom. However, he warned that traditional markets might face further downside, which could influence crypto in the short term.
Based on these developments, the post-FOMC environment presents a mixed outlook for Bitcoin. On the one hand, falling DXY, lower Treasury yield volatility, and slowing QT point to increasing liquidity, a historically positive signal for BTC. On the other hand, macroeconomic risks—including rising corporate bond spreads and potential instability in traditional markets—could still create headwinds. With Bitcoin’s historical lag behind DXY movements, the coming weeks will reveal if a delayed rally materializes. Meanwhile, global liquidity conditions and political developments remain key factors that could influence Bitcoin’s next major move.

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