Dollar Dips, Bitcoin Rises? Analyst Warns of Hidden Risks

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March 10, 2025 by Kashif Saleem

The US Dollar Index fell to 103.85, its lowest in four months, fueling Bitcoin optimism.
Treasury bond volatility (MOVE Index) and corporate bond spreads warn of potential Bitcoin turbulence.
If it holds above $84,000, analyst sees a possible surge to $128,000 soon.

Bitcoin’s outlook has turned into a tug-of-war as the US dollar weakens, but financial indicators raise red flags. The US Dollar Index (DXY) tumbled to 103.85 on March 10, marking its lowest level in four months. While this decline could fuel a Bitcoin rally, Real Vision crypto analyst Jamie Coutts warns that two financial metrics—Treasury bond volatility and corporate bond spreads—signal potential turbulence ahead.

Coutts, in a March 9 post on X, pointed out that Treasury bond volatility, measured by the MOVE Index, has remained stable but is beginning to climb. The increasing volatility in Treasuries, which serve as global collateral, tightens liquidity. If this trend continues, it could force central banks to act in ways that might indirectly favor BTC. However, he cautioned that a continued surge in the MOVE Index without a pullback in dollar volatility would be bearish for Bitcoin.

Corporate Bonds Add to Bitcoin’s Uncertainty

Another key factor raising alarms is the widening of corporate bond spreads. Over the past three weeks, these spreads have expanded steadily, and historical data suggests that major reversals in corporate bond spreads often align with Bitcoin price peaks. If this pattern holds, the cryptocurrency could be at risk of a downturn.

Despite these warning signs, Coutts maintains that the dollar’s rapid depreciation is the dominant force in his analysis. He noted that March’s decline in the greenback is one of the steepest in 12 years, an event that historically benefits risk-on assets like stocks and cryptocurrencies.

Adding to the optimism, Bravos Research stated on March 6 that the ongoing weakness in the DXY could serve as a “major tailwind” for markets driven by risk appetite, including Bitcoin.

Bitcoin’s Future Hinges on Market Movements

Coutts is not entirely pessimistic, identifying several potential catalysts that could strengthen BTC’s position. These include increased accumulation by miners, an ongoing global race for strategic BTC reserves, and a possible doubling of spot ETF positions. Additionally, Michael Saylor’s MicroStrategy plans to add between 100,000 to 200,000 BTC to its holdings this year, further supporting a bullish case.

“Think of Bitcoin as a high-stakes game of chicken with the central planners. With their options dwindling — and assuming HODLers remain unleveraged— the odds are increasingly in the Bitcoin owner’s favor,” Coutts remarked.

As of now, it is trading at $82,600, down 3.8%. Crypto analyst Ali Martinez highlights $84,000 as a crucial support level. If the cryptocurrency manages to hold above this threshold, it could pave the way for a dramatic rally toward $128,000, potentially setting a new all-time high.

Martinez’s analysis relies on the Cumulative Value Days Destroyed (CVDD) – Bottom & Top chart, which maps the cryptocurrency’s structured accumulation phases. The black line on the chart representing “accessing tops” suggests that BTC is edging closer to a potential market peak. According to Martinez If the cryptocurrency climb above $84,000, a breakout toward $128,000 becomes increasingly likely.

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