en.cryptonomist.ch
The tug-of-war between Bitcoin and the US Dollar (USD) continues.
In late October, a brief upward trend of the Dollar Index had caused a decline in the price of BTC from 115,000 USD to 100,000.
In the medium term, the trend of Bitcoin’s price tends to be inversely correlated with the strength of the US dollar, while in the short term it is sometimes correlated and sometimes not.
In fact, starting from November 6, a correction of the Dollar Index began, but it was not followed by a rise in the price of BTC.
Summary
The Impact of the Shutdown
In reality, the correlation is probably not direct, but indirect, because the movement of the two values might be driven by a common engine acting in the opposite direction: liquidity.
The more liquidity circulates in dollars, the more the Dollar Index tends to weaken, whereas conversely, the more liquidity circulates, the more Bitcoin tends to strengthen.
The issue is that due to the shutdown of the U.S. government, which began on October 1st and ended just last week, nearly one trillion dollars have been stuck in government accounts without being able to enter circulation.
This likely drained liquidity from the financial markets, thereby weakening Bitcoin even with the Dollar Index declining.
This liquidity is expected to be gradually unlocked starting this week, so the issue should be resolved within a few weeks.
The Weakening of the Dollar
The real anomaly, therefore, seems to be the weakening of the dollar despite liquidity remaining stagnant in government accounts.
In reality, this doesn’t seem to be a true anomaly either, because the trajectory of the Dollar Index in 2025 is following a path very similar to that of 2017, which was Donald Trump’s first year in the White House during his initial term.
Indeed, even then, between mid-September and early November, there was an upswing in the Dollar Index, followed by a strong and prolonged decline, occurring in three phases and concluding only in January of the following year.
Therefore, the only real major anomaly, on which the current strange situation depends, appears to be the shutdown, which is the longest in the entire history of the USA.
The Trend of Bitcoin (BTC) Price
During this month of November, the price of BTC, after dropping to 100,000 USD, actually attempted to take advantage of the decline in the Dollar Index by bouncing back up to 107,000 USD.
The problem, however, was that as more weeks passed since the start of the shutdown, liquidity became increasingly scarce in the financial markets, to the point where even the US stock exchanges began to suffer.
The struggle of Bitcoin began shortly before mid-month and continued until yesterday.
Indeed, there is a possibility that this decline ended yesterday.
There are two clues that suggest this.
The first point, as already mentioned, is that the shutdown ended last week, and this week the liquidity held in government accounts should start returning to the markets.
It should be noted, however, that we will only have an official and precise update on Wednesday.
The second is that the CMC Fear and Greed Index hit a low on Friday, at 16 points, which is very close to the 15 points that marked the April low.
This suggests that the significant excess of fear may have ended, and therefore the situation could indeed become more normal now.
Bitcoin (BTC) Price Predictions
At this point, the first thing one might expect is a slight rebound of BTC, at least to recover the ground lost against the Dollar Index.
However, there is not much to expect in the short term, precisely because government liquidity is expected to return to the financial markets rather slowly.
The scenario, however, could change in the medium-short term, that is, in the coming weeks.
In fact, if the Dollar Index continues its correlation with 2017, next week could mark the first of the three phases of decline recorded at the end of 2017.
Adding the two factors, it would be reasonable to expect a genuine rebound in the price of Bitcoin starting from the last week of the month.
It should also be noted that the CMC fear and greed index specifically measures sentiment in the crypto markets, and this is primarily due to the behavior of small retail speculators. The fact is that they often make mistakes, so much so that in the past it has often happened that after peaks of excessive fear, real rebounds occurred.
In short, from this perspective, the situation indeed seems similar to that of April, that is, before the great rebound of 2025 began, which then led to new all-time highs for BTC/USD in May.