Bitcoin Slides Below $87.5K as Gold Shines, Defying Weak Dollar Ahead of U.S. GDP Data

Bitcoin slipped below $88,000 on Tuesday, failing to capitalize on a weakening U.S. dollar as investors flocked to safe-haven assets like gold ahead of a key report on U.S. economic growth. The move signals a broad risk-off sentiment gripping markets, with gold futures nearing $2,640 an ounce, highlighting a clear divergence between traditional safe havens and digital assets.

A Market Disconnect

The crypto market's weakness is confounding traders because it comes alongside a continued decline in the dollar index (DXY), which typically boosts risk assets. The DXY has dropped below 108, approaching its lowest level since early October.

"This once again highlights the change in the underlying attitude to risk, which is also confirmed by the sell-off of global bonds," said Andre Dragosch, chief market analyst at Bitwise Europe, in an email. "In the coming weeks, we can expect an even more pronounced decline in cryptocurrencies, as well as the spread of risk aversion to stocks."

All Eyes on GDP

The market's next major catalyst is the U.S. government's report on economic growth, which could either validate the current risk-off mood or provide a reason for a rebound.

A weaker-than-expected print could reignite demand for Bitcoin as an alternative asset. However, it's uncertain whether such a catalyst would be enough to sustainably lift prices above the $100,000 level, which has recently acted as a firm ceiling.