Euro hits multi-month low against dollar, Bitcoin under pressure

The strong dollar is once again weighing on the price of Bitcoin as the euro falls against its American counterpart. Some analysts argue that with a weaker dollar, Bitcoin would long since have broken through the $90.000 mark.

Level

The euro has dropped to its lowest level in months against the US dollar. That move on the currency markets affects not only importers and travellers, but also leaves its mark on the crypto market. Bitcoin is under pressure as investors once again flock en masse to the safety of the dollar.

The American currency is benefiting from a combination of factors. Strong economic data from the United States, persistently high interest rates and a solid labour market are prompting international investors to shift their capital towards dollar assets. At the same time, the eurozone is grappling with a slower economic recovery, causing the common European currency to lose ground. Uncertainty over next year’s French presidential election (along with the country’s high debt ratio) and the new elections in Spain are also working against the euro.

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Dollar rises

For Bitcoin, a stronger dollar is traditionally not good news. The world’s largest cryptocurrency often has an inverse relationship with the American currency. When the dollar rises, the appeal of risky investments such as shares and crypto usually declines. Investors then tend to favour bonds or cash positions in dollars.

The exchange rate also plays a psychological role. Although European investors see the price of Bitcoin fall less sharply in euros than in dollars, globally the market continues to focus mainly on the American quotation. That puts extra pressure on sentiment.

Even so, some analysts regard the current pullback as temporary. Inflows into spot Bitcoin ETFs remain relatively stable, and institutional investors continue to show interest in digital assets. What is more, a future rate cut by the Federal Reserve could once again fuel greater risk appetite.

For now, however, the combination of a strong dollar and a weak euro remains a headwind for Bitcoin. As long as investors prefer safety over risk, the crypto market looks to be struggling to establish a convincing upward trend. In the coming weeks, currency markets and central banks will therefore once again play an important role in Bitcoin’s direction.