Since President-elect Donald Trump’s election victory, the U.S. dollar has strengthened by over 3% against its peers, mirroring its trajectory after his 2016 win. The DXY Index, which tracks the dollar’s value against major trading partners, peaked in December 2016 before declining over the next year, coinciding with bitcoin’s 2017 bull run. This time, the index shows no signs of slowing down, supported by Trump’s economic policies and the Federal Reserve’s actions. Despite a strong dollar typically being negative for risk assets, bitcoin has surged since the election, reaching multiple record highs. However, it’s currently trading about 10% below its mid-December peak of around $108,300. The Fed’s dilemma between risking a recession or accelerating inflation, coupled with Trump’s tariff plans, could fuel further demand for the dollar. The U.S. economy shows strong performance with over 3% GDP growth and higher-than-targeted inflation, keeping federal funds rates high with only two interest-rate cuts forecast for 2025.
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