Weakening USD Good For Bitcoin (BTC) Price, Analyst Says

BTC has had quite a tumultuous past few days, plunging as low as $91,000 amid rising geopolitical tensions surrounding US President Donald Trump's proposed trade tariffs on Canada, China, and Mexico.

Bitcoin (BTC) price has been trading within a narrow range for the past few days, with support at $96,000 and resistance at $102,000. However, analysts are now suggesting that a weakening US dollar (USD) could provide a bullish catalyst for BTC.

If the USD continues to weaken, it could trigger renewed bullish momentum for risk-on assets, including Bitcoin. Here's a closer look at the recent analysis and what it could mean for BTC's price trajectory.

Weakening USD Poised to Boost Bitcoin Price

Bitcoin's price has experienced a remarkable surge in 2023, largely driven by institutional adoption, rising inflation, and geopolitical tensions. After hitting a record high of $120,000 in April, BTC's price encountered resistance and began to consolidate.

Recently, BTC's price dropped as low as $91,000 following news of US President Donald Trump’s proposed trade tariffs on Canada, China, and Mexico. However, a temporary halt on trade tariffs targeting Mexico and Canada helped to alleviate some selling pressure.

As a result, Bitcoin's price recovered quickly, rebounding to $102,000 before consolidating in a tighter range between $97,000 and $99,000.

Despite this price consolidation, several analysts still anticipate further upside potential for risk-on assets. Bitcoin investor Lark Davis recently highlighted a crucial technical development that could be bullish for BTC.

In an X post, Davis pointed out that the USD might be on the verge of a significant correction, which could bode well for Bitcoin and other cryptocurrencies.

According to Davis, the US Dollar Index (DXY) is about to break below the 50-day Exponential Moving Average (EMA), which has historically served as a strong support level. Davis highlighted the impact of a weaker dollar on risk assets, stating:

Dollar weakening is mega bullish for risk assets. While we just saw the biggest liquidation event in the history of crypto, Bitcoin has remained strong. If DXY continues to fall and with all bullish catalysts like the US SBR & nation-state Bitcoin FOMO, this could mark the next leg of the crypto bull market.

Fellow trader Bluntz shared a similar sentiment, suggesting that the DXY has likely “topped for the next 1-2 years,” reinforcing the idea that Bitcoin could benefit from the dollar's downward trajectory.

Meanwhile, data from market intelligence platform Santiment indicates that Bitcoin whales – entities holding large BTC balances – have been accumulating steadily throughout 2023 despite the recent market volatility.

This contrasts with smaller traders, particularly those who entered the market in the past six months, who have been selling off their holdings. Historically, such accumulation by whales has preceded significant price rallies.

However, Santiment noted that it could take weeks or even months before the effects of this trend become fully evident in Bitcoin's price action.

Is Bitcoin Network Activity Signaling Lower Prices?

Despite the bullish outlook from several analysts, recent on-chain data suggests that Bitcoin network activity is at its lowest level in nearly a year, indicating potential waning interest or skepticism amid broader economic uncertainties.

Moreover, crypto analyst cryptododo7 recently shared an analysis suggesting that BTC may need to fall as low as $76,000 before its next major leg up. At press time, BTC trades at $97,336, down 0.9% in the past 24 hours.