The post Crypto Market Bleeds $76 Billion in Capital as US Dollar Hits Two-Year High ⋆ ZyCrypto appeared on BitcoinEthereumNews.com.
Advertisement     The cryptocurrency market has been facing bearish pressure since the beginning of the year. According to CoinMarketCap, the total crypto market capitalization has dropped by 10% in one week to $3.18 trillion. The downtrend has caused a negative impact on flows in and out of the cryptocurrency market. According to analyst Ali Charts on X, capital inflows in the market have declined from $134 billion to $58 billion in just one month. (Source: X) This decline points towards reduced investment activity. Moreover, traders withdrawing their money from the market could indicate market uncertainty and a lack of conviction about the short-term price performance. One of the factors that could be behind the drop amid bullish catalysts such as the upcoming inauguration of Donald Trump is the reduced demand for risk assets such as crypto and stocks. Dollar Strength Reduces Demand for Crypto Trump’s election win not only boded well for cryptocurrency prices but also for the US dollar. According to MarketWatch, the US Dollar Index (DXY) has increased to 110, marking its highest level since November 2022. Advertisement   The US dollar is inversely correlated with Bitcoin in that when the DXY is rising, crypto prices decline. Moreover, a stronger dollar tends to reduce the demand for assets like crypto as investors become risk averse. The weakened demand is also evident in the spot crypto exchange-traded fund (ETF) market. This is after spot Bitcoin ETFs recorded $732M in outflows in the last two consecutive trading days, per SoSoValue data. Spot Ethereum ETFs also saw $185M outflows last week. If institutions and retail traders continue to show reduced interest in Bitcoin and altcoins in preference for the US dollar, it could result in bearish pressure. Fear and Greed Index Shows Market is Still in Bull Territory Despite crypto…