When the strong dollar meets Bitcoin's rebound: a genuine recovery or a trap?

The current contrast is striking: while the US dollar hits its highest levels in six months driven by surprising employment data, Bitcoin suddenly jumps above $86,000 after brushing close to $80,600 a few days earlier. Appearing to be positive news, but the most attentive analysts are beginning to ask important questions: does this rebound reflect a genuine recovery of fundamentals, or does it hide structural fragilities that a strong dollar should be highlighting?

The context that triggered the rebound

The week brought macroeconomic data that caught market participants off guard. The non-farm payroll report (NFP) released on November 20 revealed 119,000 new jobs, more than doubling the forecast of 53,000. Such a robust employment performance would normally have further strengthened the dollar — and it did. The dollar index (DXY) rose above 100, reaching its six-month peak.

Here emerges the first enigma: a strong dollar has historically been a headwind for risky assets like cryptocurrencies. Yet Bitcoin reacted to the upside, not downside. What has reversed this expected dynamic?

The role of the Federal Reserve in changing expectations

The answer lies in comments from the President of the Federal Reserve Bank of New York, John Williams, who provided a more dovish perspective compared to the rigidity that the employment data might have suggested. Williams stated that “weakness in the labor market today poses a greater risk of inflation,” an observation that instantly reprogrammed expectations for upcoming monetary policy decisions.

The numbers confirm this shift in sentiment: according to CME Group analyses, the probability of a 25 basis point rate cut in December jumped from 44% a week earlier to 78.9%. A drastic reversal of expectations that temporarily pushed risky assets higher, Bitcoin included.

But within the Fed, the tone is not uniform. Susan Collins, President of the Federal Reserve Bank of Boston, maintained a cautious and indecisive stance, illustrating internal divisions on which direction to take. These conflicting signals generate subtle uncertainty, often preceding major price movements.

The technical warning bell: the relationship with gold

Although the rebound temporarily boosted traders’ morale, technical analysts like Tony Severino issue a precise warning: this rally could be an illusion, fueled more by the relative weakness of the dollar than by genuine fundamentals.

Severino points to a often-overlooked indicator: the BTC/Gold ratio. While Bitcoin rebounds against the dollar, this ratio continues to deteriorate, signaling a structural underperformance. In Elliott Wave terms, the analyst interprets the October peak as a potential “B-wave rally” within a broader correction, suggesting that distribution is still ongoing.

According to this technical reading, the corrective phase could extend until December 2025 or January 2026, intriguingly aligning with Bitcoin’s historical halving cycles. The message is clear: the current rebound might just be the first move in a sequence that ends with a more significant downward pressure.

The current reality: Bitcoin at $90.70K

At present, Bitcoin trades at $90.70K with a daily change of 0.00%, showing apparent stability. However, this appearance of balance masks underlying tensions: the strong dollar and fragile technical signals continue to create an environment where vulnerabilities could suddenly emerge.

What does all this mean for market observers?

The picture that emerges is one of cautious motivation. Yes, Bitcoin has recovered above $86,000, but the context remains contradictory. A strong dollar should not coexist with a sustained crypto rally — yet it does. Fed data remains fragmented, with differing positions among central bank leaders. And the technical signals of the BTC/Gold ratio suggest underperformance that contradicts the euphoria of the rebound.

For traders and investors, the message is one: stay vigilant. Bitcoin’s rebound in the context of a strong dollar could be an opportunity — or a well-orchestrated trap. The upcoming decisions by the Federal Reserve, future employment data, and the technical confirmation of the BTC/Gold ratio will determine whether this recovery has solid legs or if it’s simply distributing positions ahead of a deeper correction.