Van Straten Observes the Dollar’s Post-Election Trajectory Aligning with Trump’s First Term Performance.

Dollar Rises Over 3% Post-Election, Following Patterns from Trump’s First Term

Since Donald Trump’s decisive election win two months ago, the U.S. dollar has gained more than 3% against other major currencies, mirroring the trend seen after his first presidential election in 2016. The DXY Index, which measures the dollar’s strength relative to a basket of foreign currencies, reached a peak in December 2016, followed by a year-long decline that coincided with the 2017 bitcoin (BTC) rally.

This time, however, the dollar’s trajectory has been different. The DXY Index has continued to climb, with no signs of reversal. Experts attribute this to Trump’s anticipated economic policies and the Federal Reserve’s stance, both of which are expected to support the dollar’s rise.

While a stronger dollar typically exerts pressure on risk assets, Trump’s backing of bitcoin has had the opposite effect, fueling a surge in the cryptocurrency’s price since his election victory. Bitcoin recently reached new all-time highs, although it is now trading approximately 10% below its mid-December peak of around $108,300. Andre Dragosch, Bitwise’s Head of Research for Europe, believes the pace of bitcoin’s growth may slow but that the digital asset still holds strong long-term potential.

“The Federal Reserve is caught between a rock and a hard place,” Dragosch commented in an interview on X. “They either risk a recession by acting too slowly or risk sparking inflation with delayed actions.”

Trump’s commitment to imposing tariffs on major trading partners could further fuel global geopolitical uncertainty, driving additional demand for the U.S. dollar, which is often seen as a safe haven during such times.

The U.S. economy is also outshining other global markets, with GDP growth surpassing 3% and inflation running higher than expected. This economic strength is helping keep the Federal Reserve’s interest rates elevated, with only two rate cuts anticipated in 2025.

“The markets have adjusted to the Fed’s projection of only two rate cuts in 2025, much less than originally expected,” Dragosch explained. “This hawkish stance has supported the dollar, caused yields to rise, and created a headwind for bitcoin. The macroeconomic environment is proving to be a major challenge for crypto assets right now.”