Declining US Dollar Strengthens Bitcoin’s Bullish Outlook, but Analysts Warn of Other Risks
Declining US Dollar Strengthens Bitcoin’s Bullish Outlook, but Analysts Warn of Other Risks
Real Vision analyst Jamie Coutts describes Bitcoin as being in a "high-risk standoff" with central banks, leading to a cautious perspective on its future.
A declining US dollar could signal a bullish trend for Bitcoin, but two key indicators may pose short-term risks, according to Real Vision crypto analyst Jamie Coutts.
“My framework is turning bullish as the dollar weakens, but Treasury Bond volatility (MOVE Index) and Corporate Bond spreads remain concerning,” Coutts stated in a March 9 post on X.
He likened Bitcoin’s current situation to a “game of chicken” with central banks, adopting a cautiously optimistic stance despite these risk factors.
As of March 10, the US Dollar Index (DXY) dropped to a four-month low of 103.85, per Market Watch. The DXY tracks the dollar’s value against a basket of other currencies.
Coutts noted that US Treasuries serve as global collateral, and rising Treasury volatility leads to collateral haircuts, reducing liquidity. He also pointed out that while the MOVE Index—a gauge of expected Treasury bond market volatility—is currently stable, it is on an upward trend.
MOVE Index and US Dollar Index. Source: Jamie Coutts
Coutts noted that the dollar’s sharp decline in March should ideally lead to reduced volatility. However, if volatility remains high, it could signal a dollar rebound, which would be bearish for Bitcoin.
He explained that increased Treasury volatility can tighten liquidity, potentially prompting central bank intervention—an action that might ultimately favor Bitcoin.
Additionally, corporate bond spreads have been widening for three consecutive weeks. Historically, major reversals in corporate bond spreads have coincided with Bitcoin price peaks, raising concerns.
Despite these negative signals, Coutts emphasized that the dollar’s depreciation—one of the largest in 12 years—remains the dominant factor in his outlook.
On March 6, Bravos Research suggested that a weakening US Dollar Index (DXY) could provide strong support for risk assets like stocks and cryptocurrencies.
Coutts highlighted several bullish catalysts for Bitcoin, including a global push for strategic BTC reserves, accumulation through mining, Michael Saylor’s firm potentially adding 100,000 to 200,000 BTC to its holdings this year, a possible doubling of spot ETF positions, and increased liquidity in the market.
He likened Bitcoin to a high-stakes standoff with central banks, arguing that as policymakers run out of options—and as long as long-term holders (HODLers) avoid excessive leverage—the odds continue to shift in Bitcoin’s favor.
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