The U.S. dollar is expected to see its "best five-day run" since February 2023, while Bitcoin has fallen over the period as interest rates are expected to remain high and the cryptocurrency has seen volatility leading to its halving on April 20.
According to trading source The Kobeissi Letter, the dollar's strengthening is likely due to expectations for interest rates to remain higher.
"Less than a month ago, markets expected the Fed to start cutting interest rates in June. The base case is now higher and longer," wrote The Kobeissi Letter in an April 17 X post .
Higher interest rates typically encourage foreign investors to take advantage of higher returns on bonds and term deposits, boosting demand for the dollar.
The Bloomberg Dollar Spot Index (BBDXY) - which tracks the behavior of a basket of the world's 10 leading currencies against the U.S. dollar - has risen by about 2% over the past five trading days, the largest increase in 14 months.
According to BBDXY, the U.S. dollar index score stands at 106.34, up from 105.28 five days earlier, indicating that it has strengthened against the other nine currencies included in the index, including the euro, the pound and the Japanese yen.
Meanwhile, the price of Bitcoin has fallen 9% in the past five days to $63,936, according to data from CoinMarketCap .
Although not always correlated, Bitcoin and the dollar have shown an inverse relationship over the years .
On April 16, Reuters reported , Federal Reserve Chairman Jerome Powell said that the country's inflation rate - currently 3.5% - is nowhere near the central bank's target of 2%, meaning that "it will likely take longer than expected to reach that level of confidence."
Meanwhile, trader Justin Spittler warned in an April 16 post that whenever the U.S. dollar reaches an "overbought level," a significant correction quickly follows.
