According to Real Vision crypto analyst Jamie Coutts, a weakening US dollar is fueling a bullish narrative for Bitcoin, but key financial metrics suggest potential short-term risks.
In a March 9 post on X, Coutts noted that while the US Dollar Index (DXY) has plunged to a four-month low of 103.85 on March 10, according to Market Watch, two factors still raise concerns—rising Treasury bond volatility and widening corporate bond spreads.
The DXY measures the dollar’s strength against a basket of major currencies and has experienced one of its steepest declines in 12 years. Traditionally, a weaker dollar boosts risk-on assets like Bitcoin and equities. However, Coutts highlighted that heightened Treasury volatility, tracked by the MOVE Index, could tighten liquidity as collateral requirements increase.
“With the dollar dropping sharply, one would expect volatility to ease. If that doesn’t happen, it could signal a reversal in the dollar’s downtrend, which would be bearish for Bitcoin,”
he explained.
Coutts also pointed to corporate bond spreads, which have been widening for three consecutive weeks. Historically, major reversals in these spreads have coincided with Bitcoin price peaks, signalling a potential warning sign for traders.
Despite these concerns, he remains cautious, emphasizing that the broader macroeconomic landscape could still favour Bitcoin’s growth.
Beyond macroeconomic conditions, Coutts identified other bullish factors supporting Bitcoin, including a global accumulation race, increased mining activity, and institutional demand. He highlighted that Michael Saylor’s MicroStrategy is expected to add another 100,000 to 200,000 BTC to its holdings this year, while spot Bitcoin ETFs could see their positions double.
Bravos Research echoed this sentiment on March 6, stating that a weakening DXY could be a major tailwind for stocks and cryptocurrencies.
Summing up his outlook, Coutts described Bitcoin as being in a “high-stakes game of chicken” with central banks. He believes the odds increasingly favour Bitcoin holders as liquidity constraints mount, provided they remain unleveraged.
If you want to read more news articles like this, visit DeFi Planet and follow us on Twitter, LinkedIn, Facebook, Instagram, and CoinMarketCap Community.
“Take control of your crypto portfolio with MARKETS PRO, DeFi Planet’s suite of analytics tools.”
