TL;DR
- According to Matrixport, Bitcoin’s current correction could extend until March or April due to macroeconomic policies and the strengthening of the US dollar.
- The US Dollar Index (DXY) has risen for three consecutive days, driven by investors seeking refuge, putting downward pressure on Bitcoin prices.
- Despite the correction, investor sentiment remains strong, with an increase in social media mentions of “buying the dip.”
Bitcoin’s correction could extend until March or April, according to a recent report from Matrixport. In their analysis, the research firm highlighted that macroeconomic factors, such as central bank monetary policies and the strength of the US dollar, are negatively affecting the price of the cryptocurrency. Over the past week, Bitcoin fell below $80,000, amid a broader market downturn due to global trade tensions.
In this context, three main US stock market indexes also recorded significant losses. The Nasdaq 100, for instance, dropped 7.05% over the past five days, while the S&P 500 and the Dow Jones Industrial Average each fell by 1.33%.
The US Dollar as a Safe-Haven Asset
One of the main drivers of this correction is the strengthening of the US dollar. Amid economic uncertainty, investors have turned to the dollar as a safe-haven asset, which has driven its value higher. The US Dollar Index (DXY) reached a level close to 107.40, marking its third consecutive day of increases. This strengthening of the dollar is linked to lower liquidity in the markets, which, according to Matrixport, is putting downward pressure on Bitcoin prices.
The dollar’s strength is also fueled by US economic policies, including the recent confirmation from President Donald Trump regarding the increase in tariffs, which further supports the dollar’s trend. Matrixport points out that global liquidity peaked in late December 2024, reinforcing the idea that Bitcoin’s correction could continue until global markets adjust to this new economic reality.
Market Sentiment and the Future of Bitcoin
Despite the correction in Bitcoin prices, many investors are still showing strong bullish sentiment. According to data from Santiment, mentions of “buying the dip” have reached their highest level since July 2024. This behavior suggests that traders view this correction as an opportunity to accumulate more Bitcoin at lower prices, anticipating a future recovery.
Additionally, experts like Charles Edwards, founder of Capriole Investment, note that the level of fear in the market and current liquidations could be signs that the market is nearing a short-term bottom. Meanwhile, Ki Young Ju, CEO of CryptoQuant, has stated that Bitcoin’s bull cycle is not over yet, though he warns this could change if the price drops below $75,000.
