Dollar weakness alone may not suffice for Bitcoin to regain $120,000 amid ongoing global trade tensions that complicate its price outlook. Bitcoin historically shows an inverse relationship with the US Dollar Index (DXY), but its price dropped to below $114,000 as the DXY climbed to a two-month high. A significant drop in the DXY to 98.5 followed a weaker-than-expected US jobs report, prompting speculation about multiple interest rate cuts by the Federal Reserve, which undermined the dollar’s yield advantage. A weak USD generally supports Bitcoin, yet recession fears can hamper gains. For example, in 2024, despite a decline in the DXY, Bitcoin failed to maintain significant gains. Market sentiment is gauged via the ICE BofA High Yield Option-Adjusted Spread; recent declines in this spread corresponded with a Bitcoin rally. Currently, the spread is near its moving average, indicating a balanced market sentiment. Given overall uncertainties including trade tensions, it may be premature to expect Bitcoin to reclaim the $120,000 level soon.

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