The US dollar’s recent strength is causing widespread losses in the cryptocurrency market. XRP led the decline, falling over 5% in the past 24 hours. The drop is partly due to the dollar’s impact on traditional assets like gold and bitcoin.
Historically, bitcoin moves in the opposite direction of the US Dollar Index (DXY). When the dollar strengthens, dollar-denominated assets become more attractive, making cryptocurrencies less appealing. Investors are choosing traditional investments like stocks and bonds over cryptoassets.
The lack of rate cuts by the Federal Reserve has also contributed to the decline. Some experts remain optimistic about long-term crypto policies, however, believing that favorable regulations under President-elect Donald Trump’s administration could boost the market.
Maksym Sakharov, co-founder of WeFi, notes that Bitcoin and altcoins have not hit their price tops despite interest rate cuts and consolidation. He expects a shift in monetary policy under Trump, which may lead to increased corporate investment in the crypto ecosystem and potentially decouple bitcoin’s price from macroeconomic factors.
Source: https://www.coindesk.com/markets/2024/12/30/xrp-sinks-5-to-lead-crypto-losses-as-strong-dollar-rattles-bitcoin-bulls