BTC Tentative, Dollar Index Hits 5-Week High as U.S. GDP Grew 3% in Second Quarter

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Bitcoin (BTC) traded tentatively under $118,000 after better-than-expected U.S. progress knowledge pushed the greenback index to a five-week excessive.

The greenback index (DXY), which gauges the buck's worth in opposition to main currencies, rose to 99.34, the best since June 23, in line with knowledge supply TradingView.

The greenback discovered a bid from the better-than-expected U.S. gross home product (GDP) knowledge, which confirmed the financial system expanded at a 3% annualized tempo in the second quarter.

A pointy drop in imports drove the GDP increased. Meanwhile, client spending climbed 1.4% following first quarter's 0.5% in an indication of recovering home demand. Meanwhile, the gross home purchases worth index rose 1.9%, down from 3.4% in Q1.

The upbeat GDP knowledge doubtless strengthened expectations that the Fed will maintain rates of interest regular later Wednesday.

The DXY has stabilized in latest weeks, ending a pointy downtrend from January highs above 110.00. Some observers are nervous that the soundness might shake out greenback shorts, including to the upside momentum in the worldwide reserve forex and downward stress in the crypto market.

“We see potential near-term risks emerging from overcrowded positioning in USD shorts. The consensus narrative for much of 2025 has revolved around a weaker Dollar, catalyzed by the ongoing Tariff War, but with the Dollar already down 10% year-to-date, we question how much further it can fall,” Singapore-based QCP Capital's Market Insights crew stated.

“CFTC data shows traders extremely short USDJPY, a position that is not only consensus but also expensive to fund over time. In our view, the market is increasingly vulnerable to a short squeeze in the Dollar, which could force risk-off unwinds across equities, EM, and crypto alike,” the crew added.

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