Bitcoin Plunges to $89K Before Rapid Recovery

Bitcoin has seen a lot of volatility in the past few hours, falling as low as $89,300 before quickly recovering to $94,000 at press time. The main reason was the US Dollar Strength Index (DXY) which surged to a peak of 110.1, putting pressure on Bitcoin and the financial markets. However, the index has started to decline again, showing signs that the DXY may have peaked.

The rise in the value of the US dollar, as measured by the DXY, reflects the cautious sentiment of large investors who are preferring to hold cash and short-term bonds. At the same time, geopolitical tensions have increased as the US imposed more stringent sanctions on Russian crude oil exports, threatening the supply chains of major consuming countries such as China and India.

Notably, Bitcoin’s rally coincided with news that Donald Trump is preparing to sign executive orders aimed at supporting the cryptocurrency industry on his first day in office. These orders are expected to reverse several key regulatory measures, including the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin 121.

Read more: Demand for Crypto Mining Equipment in Russia Triples

According to a report from The Washington Post, these orders could help address some of the major challenges facing the cryptocurrency industry.

Additionally, some analysts believe that Bitcoin’s recent performance has been significantly influenced by MicroStrategy. On January 13, the company announced that it had completed the purchase of 2,530 BTC in just one week, bringing its total Bitcoin holdings to an impressive figure, backed by $6.5 billion from approved stock offerings. In addition, the company plans to raise an additional $2 billion through perpetual preferred stock offerings.