Bitcoin Stalls at $90,000 Amid Strong Dollar and Rising Treasury Yields Following Trump's Election Victory

Bitcoin (BTC) is currently taking a breather at the $90,000 resistance level that CoinDesk pointed out last week. Traders are keeping a close eye on the dollar index (DXY), which is showing strength. This could lead to tighter financial conditions that might slow down Bitcoin's rise.

Since early Tuesday, Bitcoin's impressive climb has hit a snag at $90,000. Prices even dipped to $85,000 for a moment, according to CoinDesk data. After a huge jump of $20,000 in just a week, it’s normal for Bitcoin to pause like this. These pauses often help recharge the bullish momentum for the next upward move. Traders in the options market are getting ready for a potential breakout to the $110,000 to $120,000 range, based on insights from QCP Capital.

Interestingly, the timing of this pause aligns with reports of traders betting on a continued rise in the dollar index. This index tracks the value of the U.S. dollar against major fiat currencies.

ING mentioned, “Traded levels of volatility are rising notably as it seems the market is actively positioning or hedging in expectation of a stronger dollar.” They advise not to go against this emerging trend.

Both BTC and USD have surged since Donald Trump’s recent election victory. The DXY has jumped by 2.7% to 106.78, reaching a six-month high, according to TradingView.

However, if the dollar continues to strengthen, it could create a historical negative correlation with Bitcoin. This might slow or even stop Bitcoin's ascent. The U.S. dollar plays a crucial role in global trade and finance. When the dollar appreciates, investors with dollar-denominated debt often reduce their exposure to riskier assets like stocks and cryptocurrencies.

Moreover, U.S. Treasury yields are on the rise, adding more support for the dollar. The yield on the two-year note climbed to 4.36% on Tuesday, the highest since July 31. The yield on the ten-year note also approached a multimonth high of 4.46% seen a week ago.

Market activity likely reflects concerns about President-elect Donald Trump’s policies, especially regarding mass deportations. These could lead to inflation, making it harder for the Federal Reserve to cut interest rates next year.

Dario Perkins, managing director of global macro at TS Lombard, noted, “Strong immigration helped central banks feel more relaxed about underlying price dynamics.” He added that sending millions back to their home countries could reverse recent trends and recreate the labor shortages seen two years ago.