$Bitcoin(BTC.CC)$ and $Ethereum(ETH.CC)$ were under pressure on Tuesday evening as the global cryptocurrency market cap fell 1% to $904.9 billion.

Why It Matters: Cryptocurrencies continue to maintain their inverse relationship with the greenback. 

On Tuesday, the dollar index, which measures the strength of the U.S. unit against a basket of six currencies, rose 1.3% after hitting the highest level since Dec. 2002, despite fears of a looming recession, reported Reuters.

The demand for the safety of dollar-based assets is up as expectations for economic activity are significantly lower." 

- said Shawn Cruz,the head trading strategist at TD Ameritrade in Chicago, according to Reuters.

GlobalBlock analyst Marcus Sotiriou said in a note that "Dollar strength causes Bitcoin weakness." A further negative for cryptocurrencies has been the withdrawal of liquidity, according to Sotiriou.

Bitcoin remains below the 2017 all-time-high which is concerning for bulls. The [Terra Classic (LUNC) ] and [TerraClassicUSD (USTC)] crash has led to a tragic contagion amongst other crypto firms, as we have seen liquidity withdrawn from the crypto market at an extraordinary rate."

Cryptocurrency trader Justin Bennett said that the dollar index closed above a significant multi-year level in June and on Tuesday touched new 20-year highs.

"All signs point to 120, suggesting another 12-20 months of suppressed movement from stocks and [cryptocurrencies]."

Michaël van de Poppe expects Bitcoin to consolidate and then break the next resistance zone and then continue on to the $23,000 level.

Van de Poppe noted the strength of the dollar index but said it was matched on the equities side as well. 

"First time we're seeing such a recovery after a severe correction + strength on the [dollar index]."

Wouldn't be surprised if this continues in the coming period, despite the overall sentiment being ultra bearish." 

- said the cryptocurrency trader.

The $S&P 500 index(.SPX.US)$ and $Nasdaq Composite Index(.IXIC.US)$ closed 0.2% and 1.75% higher, respectively, on Tuesday. Their futures were up 0.2% and 0.3%, respectively, at press time.

On-chain metrics indicate that Bitcoin supply in loss has hit 48.1% of all coins held outside exchanges. Of these Bitcoins in loss, 60% of them are held by long-term holders, tweeted Glassnode.