Bitcoin (BTC) dropped to $59,060 on Wednesday as a strengthening US dollar pushed the cryptocurrency toward fresh 2026 lows, with traders uncertain whether the brief recovery back above $60,000 will hold.
Dollar Surge Squeezes Non-Yield Assets
The US Dollar Index (DXY) climbed to its highest level against a basket of foreign currencies in 13 months, signalling growing confidence in the US economy. Bitcoin historically shows a negative correlation with dollar strength, as some investors hold the asset as an inflation hedge tied to high oil prices rather than as a pure dollar alternative.
That inflation narrative weakened sharply on Wednesday. A memorandum of understanding between the US and Iran reopened the Strait of Hormuz, sending Brent crude oil below $74, nearing pre-conflict levels. Gold also fell below $4,000 for the first time in seven months, reflecting reduced appetite for scarce assets even amid lingering anxiety about AI capital expenditure by major tech firms.
Macro Picture Favours Fixed Income Over Bitcoin
Inflation remains above the US Federal Reserve’s 2% target, keeping the case for higher-for-longer interest rates intact and directing capital toward fixed-income instruments. US Labor Department unemployment benefit claims fell by 4,000 from the prior week, confirming economic resilience rather than a slowdown and reinforcing the higher-for-longer outlook that disadvantages non-yielding assets like Bitcoin.
While there is no short-term correlation between money supply and Bitcoin’s price, analysts note investors may eventually rotate out of fixed income if yields compress. For now, capital is flowing toward dollar-denominated and yield-bearing assets rather than scarce alternatives.
ETF Outflows Add to Selling Pressure
The macro backdrop has been compounded by crypto-specific pressure. Spot Bitcoin exchange-traded funds recorded heavy net outflows over the period, while a slowdown in accumulation from Strategy, one of Bitcoin’s largest corporate holders, has weighed further on sentiment. With macro tailwinds absent and institutional buying momentum fading, analysts warn that further downside below the $59,000 level cannot be ruled out.
