Bitcoin Could Drop More as Dollar Rebound Tightens Global Liquidity

The dollar’s rise toward 101 is squeezing liquidity around the world, pressuring risk assets like Bitcoin.

Bitcoin (BTC) slipped below $122,000 on Thursday as a strengthening U.S. dollar dampened risk sentiment and tightened global liquidity conditions.

The pullback came after a strong rally that lifted the world’s largest cryptocurrency to a new record above $126,000 earlier this week.

The Macroeconomic Pressure on Digital Assets

According to market analyst Jamie Coutts, the downturn reflects macro forces rather than internal weakness.

“Bitcoin’s dip isn’t mysterious — it’s macro,” he wrote on X earlier today, noting that the U.S. Dollar Index (DXY) has rebounded toward the key 100–101 resistance range after one of its steepest drops in decades.

Coutts explained that the dollar’s rebound is squeezing liquidity worldwide, creating short-term pressure on risk assets such as BTC.

“The real question: is this the start of a new dollar cycle or just the setup for the next leg lower?” asked the analyst. “Base case: liquidity tailwinds and an improving business cycle keep the outlook for risk assets bullish into mid-2026,” he concluded.

At present, liquidity data confirms this link. On October 9, CryptoQuant market technician Arab Chain showed that open interest on Binance had fallen by 7.9%, from $15.07 billion to $13.88 billion. According to him, it meant that traders were closing leveraged positions and exercising greater caution.

This drop in market leverage usually happens before a period of consolidation, meaning that the previous rapid price advance was supported by speculative activity that is now winding down.

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Regional Flows and Neutral Miner Sentiment Point to Balance

A report published by CryptoQuant towards the end of last month revealed that Bitcoin’s direction in the coming weeks would likely hinge on liquidity flows between Asian and U.S. markets.

According to the analytics platform, the Coinbase Premium Index, which measures the price gap between U.S. and Asian exchanges, remains mildly positive, suggesting the existence of steady institutional demand, while moderate Kimchi Premium readings in Korea indicate restrained retail participation.

On-chain data also paints a balanced picture. As noted by market watcher Axel Adler Jr. on X earlier today, the Puell Multiple stands at 1.1 with Bitcoin near $121,600, a level suggesting miners are operating just above average profitability.

“The risk of capitulation is low, but there’s also no overheating like at cycle peaks,” Adler wrote, describing the setup as “neutral to bullish.”

Meanwhile, at the time of this writing, Bitcoin was trading around $121,422, down 0.4% in the last 24 hours but up 1.2% weekly and nearly 99% year-on-year, according to CoinGecko.

While the dollar’s rebound has temporarily cooled the market, most analysts, including Coutts, expect liquidity tailwinds and an improving business cycle to keep the broader outlook constructive into mid-2026.