Dollar Index Hits Nine-Month High in Two Days

According to TradingView, the DXY rose 1.5% in two days to 97.60, marking its strongest two-day gain in nine months. Analysts attribute the surge to expectations that Fed chair nominee Kevin Warsh will take a cautious approach to rate cuts and upcoming macroeconomic data.

ING analysts noted, “The dollar looks healthier. Last week’s sharp decline has been resolved since Warsh’s nomination as Fed Chair.”

Bitcoin Stabilizes but Faces Headwinds

BTC stabilized between $75,000–$80,000 after falling below $75,000 from $85,000 over the weekend. Futures market dynamics could trigger a rebound above $80,000, but the rising DXY limits this potential.

A stronger dollar increases the opportunity cost of holding dollar-denominated assets like Bitcoin and gold. Rising DXY typically signals downward pressure on BTC. Additionally, a strong dollar can tighten financial conditions, making money and credit more expensive and reducing risk appetite in global markets.

Kevin Warsh and U.S. Data Create Uncertainty

Markets closely watch Warsh’s policy approach. Previously seen as hawkish during his 2006–2011 Fed tenure, he is expected to be cautious on aggressive rate cuts compared to other candidates.

Upcoming U.S. employment data, particularly the nonfarm payroll report, will be key. Initially scheduled for February 6, the report was delayed due to the partial federal shutdown. Analysts expect 80,000 new jobs and a 4.4% unemployment rate, potentially supporting dollar stabilization.

FX and macro strategists note that the DXY’s upward trend may continue. Matthew Ryan commented, “Warsh’s past hawkish image suggests he may act cautiously on rate cuts. The dollar is likely to remain strong in the short term.”

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The US currency, measured against six other units by the Dollar Index (DXY), fell by 9.4% in 2025, marking its largest annual decline in eight years, and remained at 98.186. Markets have already priced in expectations that the Fed may start aggressive rate cuts.

Euro and Sterling Performance

The euro traded at $1.1752 on the first day of the year, while sterling reached $1.3473. Both currencies recorded their steepest annual gains since 2017. Global investors are shifting toward European currencies as the US currency weakens.

Reports from UBS and Morningstar suggest that the “American exceptionalism” theme may weaken. Signs of recovery in Europe and Japan make the euro and yen more attractive to investors compared to the US currency. ECB’s slower rate cuts relative to the Fed and the BoJ signaling an exit from ultra-loose policies are expected to increase downward pressure on the US currency.

The policy gap between the US Fed and the Bank of England (BoE) will drive GBP/USD in 2026. The Fed has cut rates to 3.50-3.75%, with markets expecting a further drop toward 3.00% in the first half, weakening dollar yield support. The BoE is likely to ease gradually from 3.75-4.00% to 3.00-3.25%, possibly 2.75% if UK growth slows. This favors GBP/USD gains early in the year, but faster BoE cuts could reduce the advantage. Market forecasts range 1.30-1.47, centering around 1.36-1.40, indicating no one-way trend.

Silver gained 171.5% year-to-date, reaching $83 per ounce. This performance made silver the best-performing precious metal of 2025 and drew investors’ attention.

Yen Follows a Different Path

The Japanese yen gained just around 1% against the US currency in 2025 and hovered near a 10-month low. BOJ rate hikes had limited impact, and investors unwound long yen positions. The government’s expansionary fiscal policy is still considered a risk to the economy in 2026.

Emerging Markets and Commodity Opportunities

A weaker US currency creates opportunities for emerging markets. Markets like Turkey may become more attractive to investors due to local currency appreciation and inflows of foreign capital. Similarly, commodities such as gold, silver, and oil benefit from a weaker greenback, becoming cheaper for international buyers and potentially triggering a new rally.

The weak US currency presents both opportunities and risks globally; investors are closely watching the Fed and other central banks’ next moves.

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Jerome Powell’s comments suggested a more cautious stance on monetary easing. The speech also reinforced concerns about inflation risks and the slowing labor market, creating renewed volatility in digital assets.

Fed Signals a Pause as Neutral Rate Comes Into View

Powell emphasized that this year’s rate reductions have brought policy into a “range of plausible estimates of neutral.” This phrasing indicated that the Fed sees less urgency for further cuts. He said any additional moves would depend on incoming data, the evolving economic outlook, and the balance of risks. The message aligned with a growing market view that an aggressive cutting cycle is unlikely.

The Fed chair also stated that labor market conditions are cooling while inflation remains somewhat elevated. He noted that downside risks to employment have increased, yet inflation risks continue to show an upward tilt. Powell reiterated that few inflation readings have been released since the October meeting, but the overall picture has not shifted significantly, justifying the recent twenty-five basis-point cut.

Additionally, Powell confirmed that purchases of short-term Treasury securities will support effective control of the policy rate. This operational detail highlights the Fed’s effort to manage volatility in funding markets during a sensitive policy phase.

January Rate-Cut Odds Collapse During Powell’s Speech

CME FedWatch data showed a sharp drop in expectations for another rate cut at the January meeting. Markets now assign only a twenty-four percent chance of a twenty-five-basis-point cut, while the probability of rates remaining unchanged has surged to seventy-six percent. This shift reflects the Fed’s more data-dependent posture heading into 2026.

The Federal Reserve will have two critical inflation reports to evaluate before the meeting. The Producer Price Index arrives on January fourteenth, and the Consumer Price Index will be released one day earlier. Both will heavily influence rate-path projections.

Despite the Fed projecting just one rate cut for 2026, Bloomberg chief economist Anna Wong sees room for a total of one hundred basis points in reductions next year. She expects weaker payroll growth and limited evidence of an inflation rebound. Powell’s term expires in May, and former President Trump is expected to appoint a chair who supports faster easing.

Key rate expectations include:

• Seventy-six percent probability of unchanged rates in January

• Twenty-four percent chance of a twenty-five-point cut

• Fed median outlook shows a single cut for 2026

• Some analysts still expect as much as one hundred basis points of easing

Bitcoin Rallies on Speech, Then Reverses as Fed Uncertainty Rises

Bitcoin spiked to ninety-four thousand dollars during Powell’s remarks, reflecting early optimism about future easing. However, the move quickly reversed, and the price slid to ninety-two thousand. This pattern mirrors the sharp swings seen after several FOMC events throughout the year.

The correction underscores how sensitive crypto markets remain to U.S. monetary policy. Traders are reassessing risk appetite as the Fed signals a pause, and macro expectations continue to dictate short-term momentum. With rate-cut uncertainty rising, digital assets may face additional volatility in the first quarter of next year.

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Fed’s Hawkish Tone Reduces Risk Appetite

Recent remarks from Federal Reserve Chair Jerome Powell signaled that interest rate cuts might not arrive until 2026, dampening market optimism. This pushed the U.S. Dollar Index (DXY) to 108, tightening global liquidity and driving capital out of risk assets. The resulting capital rotation triggered a broad profit-taking wave across crypto markets, particularly among institutional investors who shifted back to cash positions.

$5.4 Billion Options Expiry Boosts Volatility

Today, $5.4 billion worth of Bitcoin and Ethereum options expired on Deribit, leading to heightened volatility as large traders unwound positions. The liquidation of leveraged contracts pressured spot markets, causing key support levels to break and accelerating a cascade of automated sell-offs.

On-Chain Data: Profit Taking and Capital Rotation

According to Glassnode’s latest report, long-term holders sold around $45 billion in Bitcoin over the past two weeks. This trend highlights ongoing profit-taking and limited new capital inflows. With few fresh buyers entering, existing capital is merely rotating within the market, which is slowing price recovery momentum and weakening short-term demand.

ETF Inflows Slow Down, Spot Demand Softens

U.S.-listed Bitcoin ETFs saw a 60% decline in weekly inflows, with BlackRock and Fidelity funds both recording net outflows. This institutional caution has trickled down to retail sentiment, reflected in the Crypto Fear & Greed Index falling back to the “neutral” zone. Investors are moving into a wait-and-see stance, avoiding short-term risk.

BTC Technical Outlook: Critical Support Levels

Our in-house analyst notes that Bitcoin has not yet entered a favorable zone for long positions. Traders are advised to wait for a clear breakout before acting. The fact that BTC did not close below $101,100 after the recent dip is viewed as a short-term positive sign. However, a sustained move above $104,700—and ideally $111,150—is needed to confirm a recovery trend. Until then, long positions remain risky and disciplined risk management is essential.

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Bitcoin Cycles and October Outlook 

Analyst Inmortal noted that previous bull runs lasted around 1,060 days. His chart highlighted boxes marking each cycle from bottom to top. Inmortal stated, “If history repeats, the bull run ends in October.” Analyst Jelle echoed this view, pointing out that Bitcoin may only have around 55 days left in this cycle. 

At the same time, Jelle emphasized altcoin behavior. He argued that Solana and Ethereum are preparing for new price levels since altcoins often peak a month after BTC. Analyst Ali reinforced this with technical evidence, citing a weekly RSI divergence. The same signal preceded the 2021 bear market, raising further caution. 

September Weakness and Macro Factors 

Bitcoin faces its weakest month historically as September approaches. Coinglass data shows an average return of –3.77% during this period. Indicators such as Spot Taker CVD and BTC’s Taker Buy/Sell Ratio also reflect mounting selling pressure. However, market sentiment remains as important as technical indicators. Colin Talks Crypto highlighted this point, saying, “We haven’t seen peak euphoria yet.” 

Meanwhile, the Federal Reserve’s upcoming rate decision could strongly influence Bitcoin’s direction into year-end. Volatility in September may reshape investor strategies across the market. Bitcoin’s bull run has already entered its third year, with price levels still below the widely anticipated $100,000 mark. Investors seem to focus more on the scale of the rally rather than its duration. Moreover, altcoin momentum continues to indirectly affect Bitcoin’s trajectory. 

In the end, technical signals suggest that October could become a turning point. Yet sentiment and macroeconomic events may shift the timeline. This makes the coming weeks a decisive phase for Bitcoin’s future direction. 

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Expectation: 225K
Actual: 224K
Previous: 226K 

PPI is an important inflation indicator that shows changes in producer costs. US Monthly Producer Price Index (PPI) announced at 0.9% (Expected: 0.2%, Previous: 0%)

Expectation: 0.2%
Actual: 3.3%
Previous: 0% 

Impact of U.S. PPI and Jobless Claims on the Market 

The U.S. PPI data indicates changes in producer costs and provides early signals of inflation. A high U.S PPI increase raises the likelihood of costs passing on to consumers, influencing investors’ inflation expectations. This can shape the Fed’s interest rate decisions; if there is upward pressure, a rate hike may be considered, while low or stable values support a rate cut or maintaining current levels. 

Jobless claims reflect the health of the labor market. Rising claims indicate economic slowdown and may prompt the Fed to pursue more accommodative policies. Low claims suggest a strong labor market, supporting decisions to raise or maintain interest rates. These data create short-term volatility in stock, currency, bond, and crypto markets, directly affecting investor strategies. 

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On Truth Social, Trump accused Powell of doing a “terrible and incompetent” job in renovating Fed buildings. He also claimed Powell committed perjury in this matter, adding that the Justice Department has made similar allegations. This further increased the political pressure on the Fed Chair. 

Last month, Trump visited the Federal Reserve to inspect the ongoing renovation projects. During his visit, he urged Powell to lower interest rates. The president stressed that the Fed was too late in taking action, causing significant harm to the U.S. economy. 

CPI Data and Tariff Debate 

Trump’s comments came after the release of July’s U.S. Consumer Price Index (CPI) data. The report showed annual inflation at 2.7%, below the expected 2.8%, while monthly CPI fell from 0.3% to 0.2%. These results reinforced Trump’s view that tariffs had a limited impact on inflation. 

The president stated that tariffs brought large sums of money into the U.S. and that consumers did not bear the costs. Moreover, he argued that tariffs did not create price pressures as the Fed had anticipated. Powell, however, maintained that the best approach was to wait and assess the tariffs’ effects before making a rate cut decision. 

Stephen Miran, Trump’s nominee for the Fed Board of Governors, also commented positively on the CPI data. Miran said inflation was “performing well” and that there was no evidence of tariff-driven price increases. He also noted that since Trump took office, annual CPI inflation had averaged 1.9%. 

These developments indicate that the tension between the Fed and the White House over interest rate policy is set to continue. 

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Summary: 

• Expected: 227K 
  Previous: 221K 
  Actual: 217K

Why This Data Matters 

Weekly initial jobless claims in the U.S. indicate the number of people filing for unemployment benefits for the first time. This data provides direct insight into short-term labor market dynamics. A decrease in claims signals fewer layoffs and suggests labor market stability. In a period marked by high inflation and tight monetary policies, such data is crucial for the Federal Reserve’s decisions. 

Historical Comparison: General Trend in Jobless Claims 

U.S. jobless claims have fluctuated recently, showing a limited upward trend overall. Claims rose to 233,000 at the end of June, then dropped again to 227,000 by mid-July. 

• In the second half of 2024, claims generally fluctuated between 220,000 and 240,000. These levels are still considered low historically. For example: 
• During the 2020 pandemic, weekly claims soared to several million. 
• In mid-2022, weekly claims averaged around 250,000–270,000. 
• In 2023, these numbers fell to around 200,000–230,000. 

This year’s levels indicate that the U.S. labor market continues to largely sustain its post-pandemic recovery, with no widespread layoffs.

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Trade Talks and Futures Fuel the Rally 

The rally was supported by positive sentiment surrounding ongoing trade talks between the U.S. and China in London. Expectations of reduced tariffs hold the potential to ease global trade tensions. Such developments boost capital flows into riskier assets, positively impacting assets like Bitcoin. A 90-day temporary trade agreement between the U.S. and China in May similarly drove BTC prices upward. 

On the other hand, markets are not anticipating a rate cut at the FOMC meeting on June 18. According to the FedWatch tool, the probability of interest rates remaining unchanged is 99.9%. Therefore, the likelihood of a rate cut is largely dismissed. Positive trade outcomes could offset inflation pressures from upcoming CPI data, potentially reducing concerns about tighter Fed policies impacting crypto markets. 

Futures Market Sees Strong Interest: Open Interest Hits Record High 

Bitcoin’s climb past $110,000 was driven by growing investor interest in the futures market. According to CoinGlass data, total open interest (OI) reached $77 billion on June 10, marking the highest level in the past two weeks. This increase highlights strong demand for long BTC positions. 

Over the past 24 hours, BTC open interest surged by 8%, signaling a shift toward leveraged trading. On the same day, the CME Bitcoin futures market hit a record with 151,915 BTC in open interest, valued at $16.6 billion. Derivatives trading volume also saw significant growth, rising 112% to $114.3 billion in the last 24 hours. This indicates strong market-wide support for the upward momentum. 

Liquidations of short BTC positions further reinforced the price increase. As of June 10, $195 million in short positions were liquidated, while long position liquidations amounted to only $9.3 million. These figures underscore the strong bullish momentum in the market. 

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Factors Affecting the Crypto Market 

Macroeconomic Uncertainties 

Analyst Michael van de Poppe states that weaker-than-expected U.S.GDP data has triggered a flight from risky assets. Fed Chairman Jerome Powell’s remarks highlighting inflation risks have reduced hopes for rate cuts. Meanwhile, analyst Peter Brandt emphasizes that this situation has increased selling pressure in the market. 

Geopolitical Tensions 

Crypto analyst CryptoTony notes on the X platform that negative expectations regarding Russia-Ukraine peace talks have accelerated profit-taking. Geopolitical uncertainties are creating temporary pressure on volatile assets. Analyst Benjamin Cowen states that such risks trigger short-term corrections but clearly asserts that the long-term trend remains intact. 

Technical Factors and Profit-Taking 

Technical analyst Katie Stockton indicates that the RSI indicator is approaching the “overbought” zone. Profit-taking by algorithmic traders following the rapid rise in recent weeks has fueled a short-term correction. Analyst Josh Rager adds that the liquidation of leveraged positions has deepened the decline. 

Regulatory Developments 

Crypto commentator Lark Davis says the SEC’s decision to postpone the XRP Spot ETF ruling to June 17 has caused disappointment in the market. The deferral of decisions on DOGE and Ethereum staking ETFs to October has weakened bullish expectations. According to analyst Wendy O, these delays temporarily shake investor confidence, but their long-term impact remains limited. 

Additionally, the bankrupt crypto platform FTX is set to begin its second major $5 billion payment to creditors on May 30, creating liquidity pressure in the market. 

Developments That Could Impact the Crypto Market in the Near Future 

• Fed’s Interest Rate Policy – Analyst PlanB states that the Fed’s June 2025 meeting will be critical for markets. Weak GDP data could signal rate cuts, potentially revitalizing crypto assets. However, analyst Tone Vays predicts that if inflation concerns persist, the decline could extend. 
• Crypto Reserve Moves – Analyst Anthony Pompliano notes that the Czech Republic Central Bank’s efforts to evaluate Bitcoin as a reserve asset are gaining momentum, and such institutional moves could push Bitcoin above $100,000. 
• Exchange Security – Analyst Crypto Rover explains that the $1.46 billion hack at Bybit in February 2025 has shaken confidence in exchanges. However, enhanced security measures could bring investors back. 
• Altcoin Potential – Bernstein analyst Gautam Chhugani predicts that AI (Fetch.AI) and Layer-2 (Arbitrum, Polygon) projects will shine in 2025. Developments in these projects could trigger an altcoin rally. 

The crypto market decline to $3.28 trillion stems from macroeconomic data, geopolitical risks, technical corrections, and regulatory delays. However, the market is holding at the $3.2 trillion support level and carries recovery potential. The Fed’s interest rate policies, state-backed crypto reserve moves, and exchange security measures will determine the direction in the coming weeks. 

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