How Trump Created an ‘Unusual Situation’ for Bitcoin and the US Dollar

Pairing a strong US dollar with a bullish Bitcoin isn’t something we see every day. But as 2025 begins, the financial landscape seems to be shifting.

“There’s a bit of an unusual situation in that both the US dollar and Bitcoin are bullish heading into 2025,” said Paul Howard, chief investment officer at crypto hedge fund Wincent and a former Goldman Sachs trader.

Howard explained to DL News that this rare alignment is largely influenced by President-elect Donald Trump.

The US dollar, currently at its strongest in two years, owes its resurgence to Trump’s commitment to strengthening the nation’s currency, coupled with expectations of robust economic growth and persistently high interest rates.

Adding to this dynamic is Trump’s pro-crypto regulatory stance, which has bolstered investor confidence. His pro-crypto nominations for key roles, such as Paul Atkins for the Securities and Exchange Commission and David Sacks as AI and crypto czar, have further energized market sentiment.

Howard predicts that this unusual Bitcoin-dollar correlation could last for at least the next six months.

Traditionally, Bitcoin — often referred to as “digital gold” — moves inversely to the dollar. A strong dollar typically pressures Bitcoin’s price downward, while a weaker dollar supports its value.

However, not everyone shares this optimism. James Check, a former senior analyst at Glassnode, presented a more cautious view in his January 2 newsletter.

A Market Paradox

“Bitcoin is the most sensitive asset to global liquidity,” said Check, highlighting the interplay between key macroeconomic factors — the US dollar, oil prices, and US Treasury yields — all of which are rising.

This upward momentum suggests that Bitcoin could face additional downward pressure despite the favorable regulatory environment ushered in by Trump.

The Federal Reserve’s hawkish stance on inflation has driven US Treasury yields higher, which adds further challenges to Bitcoin’s price action, according to Howard.

For now, 2025 opens with what Check calls a “choppy” market. “With bond yields rising like this, we’re more likely to get some swings lower in the near future,” he said.

BitGalactic’s Perspective

At BitGalactic, we recognize that the current convergence of Bitcoin and the US dollar’s bullish trajectories presents both opportunities and risks for investors. While Trump’s regulatory moves have undoubtedly invigorated the crypto space, the underlying macroeconomic headwinds — such as rising Treasury yields and oil prices — shouldn’t be underestimated.

For seasoned investors, this dual bullish environment could offer unique arbitrage opportunities, especially in pairs trading and hedging strategies. However, for those new to the space, navigating the volatility of early 2025 will require a keen eye on macro trends and swift decision-making.

As always, we encourage our community to adopt a balanced approach: stay informed, diversify holdings, and remain agile in a rapidly evolving market. Bitcoin’s journey alongside a strong dollar may be an anomaly, but as history shows, anomalies often lay the groundwork for transformative market shifts.