XRP (XRP-USD) led the crypto losses over the last days of 2024, falling 9.23% over the past five days as the U.S. dollar’s strength rattled Bitcoin and other digital assets. The stronger dollar, historically seen moving in the opposite direction of Bitcoin, made dollar-denominated assets more appealing, dampening demand for cryptocurrencies. According to CoinDesk, Bitcoin dropped as much as 3%, while other major tokens like Ethereum (ETH-USD), Solana (SOL-USD), and Dogecoin (DOGE-USD) followed suit.
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Dollar Strength affects Bitcoin and Altcoins
The U.S. Dollar Index (DXY) gauges the greenback against other major currencies, and its rise is typically bad news for crypto. With the dollar strong, investors are leaning toward traditional assets like U.S. Treasuries or stocks, which offer better returns in this environment. This shift has created a drag on the crypto market, stalling hopes for a December “Santa rally.”
Long-Term Optimism Remains despite Short-Term Struggles
However, some remain optimistic about the future. Maksym Sakharov, co-founder of WeFi, told CoinDesk, “Despite the ongoing consolidation, Bitcoin and altcoins have not hit their price tops.” He believes that with favorable regulations under President-elect Donald Trump, Bitcoin could decouple from traditional market fluctuations in 2025.