The continuous surge of the US dollar and the outlook for the crypto market BTC's total network computing power hits a record high

Macro Interpretation

The strong performance of the US dollar in early 2025 is still worthy of attention, because it is also related to the US dollar-denominated crypto market. We will explore the sustainability of the US dollar's strength and its impact on the crypto market in order to provide valuable reference for everyone.

Since Trump returned to power, the US dollar index has shown a significant upward trend. This change is not an isolated phenomenon, but the result of multiple factors. First, the market is optimistic about the economic policy expectations after Trump's return. Trump's tax cuts, deregulation, and potential stimulus measures are believed to boost US economic growth, thereby increasing the real value of the dollar. In addition, rising inflation expectations have also exacerbated the strength of the dollar. Trump's policies, including restrictions on immigration and increased tariffs, may further promote inflation rebound on both the supply and demand sides, thereby increasing the attractiveness of US dollar assets. At the same time, the increase in policy uncertainty has also prompted investors to flock to the relatively safe haven of the US dollar.

But can the dollar's strength continue to face many challenges? There are potential conflicts between Trump's policy goals, such as the balance between inflation, deficits and the economy. If productivity cannot be improved or government spending cannot be reduced, the increase in inflation caused by tariffs and tax cuts will conflict with the low interest rate policy. In addition, Trump's dollar-first policy is also in conflict with isolationism and the practice of reducing trade deficits. The contradictions between these policies mean that they cannot be implemented smoothly at the same time, resulting in a difference between strong expectations and weak reality. Once the policy effect is very different from market expectations, the strong position of the dollar may be shaken.

In addition to the impact of US domestic economic policies, the dynamics of the global economy also have an important impact on the trend of the US dollar. In particular, the performance of the European economy may become a turning point for the strengthening of the US dollar. Since the outbreak of the Russia-Ukraine conflict, the European economy has been continuously impacted by unstable energy supply, rising prices and geopolitical risks. If Trump's return can lead to a temporary easing of the Russia-Ukraine conflict, Europe's pressure on energy supply and prices will be relieved, which will help improve the long-term capital expenditure level and investment expectations of the European manufacturing industry. Once the European economy shows signs of recovery, funds may flow out of the United States, further weakening the strength of the US dollar.

In terms of inflation, the base effect of the high inflation at the beginning and low inflation at the end of the year in the United States may cause inflation to fall first and then rise. Musk's remarks on government layoffs and spending cuts have raised market concerns about fiscal contraction, which may become the primary factor in curbing inflation. However, the Trump administration may take tough measures to suppress oil prices, as well as regulate oil prices and curb inflation by relaxing regulations on oil and gas drilling. In addition, if the conflict between Russia and Ukraine eases and Russian oil can re-enter the international market, it may also cause oil prices to fall. These factors will have an important impact on the inflation level in the United States, and thus affect the trend of the US dollar.

Next, we analyze the impact of the US dollar trend on the crypto market. As a relatively new and highly volatile field, the crypto market is extremely sensitive to changes in the global economic environment. The strong performance of the US dollar may have a dual impact on the crypto market. On the one hand, the strengthening of the US dollar may attract some investors to withdraw funds from the crypto market and seek relatively stable US dollar assets. This will lead to a drop in cryptocurrency prices and increased market volatility. On the other hand, the strength of the US dollar may also prompt some investors to seek assets to hedge risks, and cryptocurrencies, as a decentralized safe-haven asset, may benefit to a certain extent. In particular, those cryptocurrencies with stable value and low volatility may become the first choice of investors.

In addition, the dynamics of companies such as MicroStrategy also have an important impact on the crypto market. MicroStrategy announced plans to raise up to $2 billion through the issuance of preferred shares to strengthen its balance sheet and acquire more Bitcoin. This move shows that despite the many uncertainties facing the crypto market, there are still institutional investors who are optimistic about it. MicroStrategy's Bitcoin investment strategy is seen as a long-term value investment, and its success or failure will have an important impact on confidence in the crypto market. If MicroStrategy can successfully raise funds and continue to increase its holdings of Bitcoin, this will inject new vitality into the crypto market and drive up the prices of mainstream cryptocurrencies such as Bitcoin.

The crypto market still faces many challenges. First, the uncertainty of the regulatory environment is an important factor restricting its development. Different countries and regions have different regulatory attitudes towards cryptocurrencies, which may lead to market differentiation. Secondly, the volatility of the crypto market is relatively large, and investors need to have a high risk tolerance. In addition, issues such as technical security and market manipulation may also have a negative impact on the stability of the crypto market.

In general, the strong performance of the US dollar and the volatility of the crypto market are intertwined, forming an important feature of the current financial market. The trend of the US dollar is affected by multiple factors, including domestic economic policies, global economic dynamics, and inflation levels. The crypto market is constrained by multiple factors such as the trend of the US dollar, the regulatory environment, and technical security. In the future, investors need to pay close attention to market dynamics and policy changes in order to flexibly respond to possible risks and opportunities. At the same time, for the crypto market, strengthening supervision, improving technical security, and enhancing market transparency will be important directions to promote its healthy development.

BTC Data Analysis

On the 16th anniversary of Bitcoin’s birth, the BTC hash rate (the total computing power of the Bitcoin network) reached a record high of 1,000 EH/s, which is almost twice the network hash rate 12 months ago. According to coinank data, as of now, the total computing power of the Bitcoin network is 809.3EH/s.

Data shows that the United States accounts for more than 40% of the Bitcoin network hash rate, with two U.S.-based mining pools, Foundry USA and MARA Pool, accounting for more than 38.5% of all mined blocks. Foundry USA's hash rate reportedly grew from 157 EH/s at the beginning of 2024 to approximately 280 EH/s in December. Foundry is currently the largest single mining pool by hash rate, controlling approximately 36.5% of the total hash rate of the Bitcoin network.

The Bitcoin hash rate has reached a new all-time high, marking a near doubling of the Bitcoin network's total computing power compared to 12 months ago, an increase that demonstrates the resilience and expansion of the Bitcoin mining industry. The United States dominates the Bitcoin network hash rate, exceeding 40%, with Foundry USA in particular becoming the largest single mining pool, controlling approximately 36.5% of the Bitcoin network's total hash rate. This increase in concentration may pose a challenge to the decentralized nature of the Bitcoin network, but it also reflects the United States' leading position in Bitcoin mining. Currently, the Bitcoin hash rate is 809.3 EH/s, a high hash rate level that enhances the security of the Bitcoin network, resists potential attacks, and may have a positive impact on Bitcoin's price stability.