Quick Breakdown
- Bitcoin trades in bear territory below the 21-week moving average, midterm election headwinds, and typical fourth-year cycle weakness, but the macro setup favours risk assets.
- U.S. dollar weakness is building a floor: global reflation theme intact, forcing dollar-based investors to stay fully allocated to Bitcoin and other risk assets to preserve purchasing power.
- Trump tolerates further dollar depreciation, signalling a shift as foreign investors accelerate diversification away from U.S. exposure and supporting reflation trades, including Bitcoin in the long term.
Bitcoin looks stuck in bear territory on paper, trading below its 21-week moving average and facing the usual midterm election-year headwinds, plus the typical fourth-year cycle dip. Yet a new Matrix report argues the bigger story is U.S. dollar weakness quietly putting a floor under risk assets like BTC.
The analysis shows Bitcoin is still moving within classic bear parameters, backed by on-chain data and technical indicators. Historically, prices often drop in this phase of the cycle, especially during U.S. midterm years. But the report takes a more upbeat stance on risk assets overall, pointing to a strong global reflation theme that keeps dollar-based investors fully exposed to crypto and stocks to protect their purchasing power.
Trump’s recent hands-off approach to the dollar’s slide is seen as a green light for further depreciation. That shift matters a lot right now, since foreign investors are already speeding up their move away from U.S.-heavy assets.
Dollar breakout signals long-term shift
Exhibit 1 in the report plots Bitcoin against the U.S. Dollar Index over 15 years. It highlights a clear break in the 14-year USD uptrend. The dollar peaked around 110-115 in recent years before rolling over, while Bitcoin climbed from the low thousands to the mid-60,000 range. The chart shows the USD line finally cracking below a long-term rising channel, with arrows marking key down moves.
Bitcoin benefits from forced allocation
With the dollar losing ground, investors who hold dollars have little choice but to stay in risk assets like Bitcoin to avoid erosion of real value. The report sees this as a powerful tailwind, outweighing short-term bearish signals. While Bitcoin hasn’t broken out yet, the macro setup, reflation plus dollar weakness, suggests any dips could find buyers faster than expected.
The Matrix analysis stresses that this is the analyst’s independent view, not official Matrixport guidance. Meanwhile, Bitcoin extended its corrective phase after failing to reclaim a closely watched technical level that has historically separated bull markets from prolonged downturns.
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