Fed Rate Cut Fears Trigger Dollar Warning, Bitcoin Holds $68k Amid Extreme Fear

VADODARA, February 10, 2026 — The U.S. dollar faces a potential 10% devaluation this year. State Street analyst Lee Ferridge issued the warning. His daily crypto analysis hinges on Federal Reserve policy exceeding market expectations. Traders currently price in two 2026 rate cuts. A third cut remains possible. Political pressure from the Trump administration could force the Fed's hand. Additional cuts would increase foreign investor hedging demand. This directly weakens the dollar index (DXY).

Investigation: The State Street Dollar Devaluation Thesis

Walter Bloomberg first reported the analysis. According to the report, Lee Ferridge serves as a macro strategist at State Street Global Markets. He identified a critical divergence. Market expectations currently anchor at two 25-basis-point cuts in 2026. The Federal Open Market Committee (FOMC) dot plot from December 2025 suggested a more hawkish path. Ferridge's model incorporates political risk. The Trump administration has publicly criticized Fed Chair Powell's stance. This creates pressure for more accommodative policy.

Ferridge's mechanism is precise. Each unexpected rate cut reduces the yield advantage of U.S. Treasury securities. Foreign investors then hedge their dollar exposure more aggressively. This selling pressure on the dollar could catalyze a 10% decline in the DXY. The analysis was published in a client note on February 9. It did not specify a timeframe for the full move.

Market Context & Historical Precedent

Historically, dollar weakness correlates strongly with Bitcoin strength. The 2020-2021 cycle demonstrated this. The DXY fell 12.5% from its March 2020 peak. Bitcoin rallied over 600% in the same period. This relationship stems from Bitcoin's fixed supply. It acts as a hedge against fiat currency debasement.

In contrast, the current environment shows decoupling. The Crypto Fear & Greed Index sits at 9/100 (Extreme Fear). Bitcoin trades at $68,256, down 1.45% in 24 hours. This suggests internal crypto market structure dominates short-term price action. Macro drivers are being discounted. Market analysts point to over-leveraged positions being liquidated. This creates a liquidity grab at key technical levels.

Related macro developments are intensifying the focus on institutional stability. For instance, MicroStrategy's substantial debt strategy faces renewed scrutiny as Bitcoin tests lower supports. Simultaneously, major financial institutions are adjusting their crypto exposure, as seen when JPMorgan slashed its Coinbase price target amid the prevailing fear.

Technical Architecture & Price Action

Bitcoin's chart reveals a critical juncture. The price currently tests the $67,200 level. This level represents the 0.618 Fibonacci retracement from the 2025 all-time high. It is a major confluent support zone. A daily close below this level would invalidate the higher-timeframe bullish structure. The Relative Strength Index (RSI) on the daily chart reads 38. This indicates bearish momentum but not oversold conditions.

On-chain data from Glassnode shows a significant volume profile node at $65,000. This is the next major support. The 200-day moving average provides dynamic support near $63,500. Resistance sits firmly at $71,500. This level has rejected price advances three times in the past month. It forms a clear order block. A break above $71,500 with volume would signal a trend reversal.

By The Numbers

Why It Matters

This analysis matters for portfolio construction. A weaker dollar increases the nominal value of dollar-denominated assets like Bitcoin. Institutional capital allocation models incorporate DXY forecasts. State Street manages over $4.1 trillion in assets. Their analysis influences pension funds and sovereign wealth funds. , the Federal Reserve's official meeting calendar shows the next FOMC decision is March 19. This creates a high-volatility event window.

Market structure suggests the current Extreme Fear reading may be a contrarian signal. However, on-chain liquidation heatmaps indicate dense sell-side liquidity above $72,000. This creates a "gamma squeeze" risk if price rallies abruptly. Retail sentiment, measured by social media volume, remains pessimistic. This often precedes a trend reversal when combined with a macro catalyst.

Expert Commentary

The interplay between Fed policy and digital asset valuation is entering a new phase. Our models show that every 1% decline in the DXY correlates with a 3-5% increase in Bitcoin's purchasing power parity model. The current market fear is a technical phenomenon, masking the underlying macro shift. The real test is whether Bitcoin can hold the $67.2k Fibonacci level as the dollar narrative evolves.

— CoinMarketBuzz Intelligence Desk

Market Outlook & Price Scenarios

Two primary technical scenarios emerge from the current data.

• Bullish Invalidation Level: $71,500. A sustained break above this order block with increasing spot volume would confirm the bearish trend has invalidated. This would target a move toward the $78,000 resistance zone.
• Bearish Invalidation Level: $67,200. A daily close below this 0.618 Fibonacci support would confirm continued downside momentum. The next major support is the volume profile node at $65,000.

The 12-month institutional outlook hinges on Fed credibility. If the Fed delivers more cuts than expected, the dollar weakens. This could funnel capital into alternative stores of value. Bitcoin's fixed supply and institutional adoption via ETFs position it as a primary beneficiary. However, short-term price action remains dictated by leverage flush-outs and liquidity gaps.