Bitcoin Defies Norms with Rally Amid Rising U.S. Dollar and Treasury Yields

According to CoinDesk: Bitcoin's recent surge above the $50,000 mark aligns with a strengthened U.S. dollar and increased Treasury yields. This contrasts with its historical performance, which often exhibits growth during periods of dollar weakness. The U.S. dollar index (DXY), a measure of the greenback's value against major fiat currencies, has risen by approximately 3% this year, including around a 1% gain since January 23rd. In the past, Bitcoin has typically rallied during periods of dollar depreciation. In February 2021, for example, when the DXY slipped by 2%, Bitcoin surged past $50,000. Generally, a robust dollar leads to global financial tightening, reducing investments in riskier assets such as cryptocurrencies. Despite the DXY and Treasury yield trends, Bitcoin's resilience can be attributed to robust inflows into U.S.-based spot exchange-traded funds (ETFs). Since their introduction on January 11th, these ETFs have witnessed nearly $5 billion in net inflows. Regions like China and Nigeria, coping with economic challenges, may be contributing to a 'safe-haven' buying trend for Bitcoin. China is combating deflationary pressures, a housing market crisis, and a stock market downturn, while Nigeria is grappling with rampant inflation and a persistent currency crisis. QCP Capital also suggests that the decision by the Chicago Mercantile Exchange (CME) to increase the required margin for trading its Bitcoin futures may have contributed to Bitcoin's current rally.