JPMorgan Reveals Why Bitcoin Price Rally Is Missing Despite Weak Dollar

The weakness in the US dollar has failed to trigger a rally in Bitcoin price, while gold and other hard assets rise further. JPMorgan strategists claim the divergence stems from the short-term dollar’s decline due to sentiment and not monetary policy outlook.

Dollar Weakness Driven by Short-Term Factors: JPMorgan

The U.S. dollar index (DXY) dropped 10% over the past year, reflecting tariffs and broader market dynamics. JPMorgan analysts explained that the latest decline is due to short-term capital flows and market sentiment, rather than any shift in growth or monetary policy expectations.

Strategists added that rate differentials have actually moved in the US dollar’s favor since the start of the year. The current weakness is similar to the short-term dollar decline last April. They expect the currency to stabilize as the U.S. economy strengthens.

As CoinGape reported, the US dollar advanced above 96 after Treasury Secretary Scott Bessent dismissed speculation of US intervention to support the Japanese yen.

Bitcoin Price Fails to Rally amid Weak US Dollar

As Bitcoin price typically moves in the opposite direction of the US dollar and the US 10-year Treasury yield, the recent fall has surprised crypto investors. Historically, BTC has rallied during declines in the US dollar.

However, BTC has underperformed this time and remains largely range-bound. JPMorgan pointed out that investors are not treating Bitcoin as a classic hedge against currency weakness. Bitcoin price is moving like a liquidity-sensitive risk asset rather than a store-of-value.

Meanwhile, Bitcoin continues to trade in line with broader risk sentiment and macro liquidity conditions. Notably, the price dropped as the US Federal Reserve kept rates unchanged and Fed Chair Jerome Powell maintained an overall hawkish outlook. In contrast, gold and other hard assets have rallied strongly amid dollar weakness.

Gold futures see largest one day dollar gain in history. pic.twitter.com/2y8PFxZASF

— CME Group (@CMEGroup) January 29, 2026

JPMorgan expects Bitcoin price to continue lagging traditional macro hedges until growth or rate dynamics take over from flows and sentiment as the primary driving factors. As it stands, the market expects the US Fed to raise rates in June after Powell steps down from the central bank and Trump’s Fed Chair pick takes office.

BTC price is trading more than 2% lower at $87,845, with an intraday low and high of $87,612 and $90,439, respectively. Trading volume remains muted ahead of crypto options expiry.