Bitcoin Falls to $121K After Record Highs as U.S. Dollar Strengthens
Bitcoin’s price dropped sharply to around $121,000 on Wednesday, retreating from record highs above $126,000 earlier in the week. The pullback came as profit-taking increased and a stronger U.S. dollar pressured the popular “debasement trade.”
By 02:22 ET (06:22 GMT), Bitcoin traded 2% lower at $121,449. The world’s largest cryptocurrency had previously hit an all-time high of $126,186 on Monday, driven by strong inflows into Bitcoin exchange-traded funds (ETFs) and speculation that the U.S. government shutdown would weaken the dollar.
Bitcoin Retreats as Dollar Strength and Shutdown Caution Weigh
The U.S. Dollar Index climbed to a three-week high on Tuesday, as investors sought safety amid concerns that the government shutdown, now in its second week, could delay key economic data and complicate the Federal Reserve’s policy outlook.
Earlier, Bitcoin’s rally had been supported by sustained ETF inflows, giving institutional investors new exposure to crypto markets. Analysts also cited “debasement trades” — bets against fiat currencies — as a key factor behind Bitcoin’s surge.
However, as Treasury yields rose and the dollar strengthened, traders began to doubt the sustainability of Bitcoin’s record rally. With key U.S. data releases delayed, markets are now focused on Fed meeting minutes and comments from Chair Jerome Powell later this week.
Crypto Stocks Drop Alongside Bitcoin
Crypto-related equities tumbled on Tuesday, tracking Bitcoin’s decline.
MicroStrategy (NASDAQ:MSTR) shares dropped 7%, while Coinbase Global (NASDAQ:COIN) fell 4%. Bitcoin miners were also hit, with Marathon Digital (NASDAQ:MARA) losing 4% and Riot Platforms (NASDAQ:RIOT) down 3%.
Altcoins and Meme Tokens Extend Losses
The broader crypto market followed Bitcoin lower. Ethereum (ETH) fell 4.8% to $4,442.85, while XRP slipped 4% to $2.85.
Solana dropped 5%, Cardano fell 5.2%, and Polygon lost 3.6%.
Among meme coins, Dogecoin plunged 6%, and $TRUMP declined 4%.
