Why doesn’t bitcoin benefit from weakening the dollar?

For several weeks, the US dollar index (DXY) has decreased significantly, but unlike the expectations of Bitcoin investors, it does not show parabolic growth usually associated with this phenomenon. This article analyzes the causes of this anomaly and its potential consequences.

The historical relationship between Bitcoin and the dollar in question

On 7 March 2024, the US dollar index fell to 103.60, after 28 February reached 107.6, which meant a decline of almost 4 %in a few days. Historically, this situation creates a favorable environment for bitcoins, which is generally considered to be a refuge against the weakening of the dollar.

Until mid -2024, reverse correlation between DXY and bitcoins for analysts was almost certain. When the dollar was weakened, Bitcoin appreciated. This dynamics was explained by the location of the Queen of cryptus as protection against inflation due to solid monetary policy and a limited offer similar to digital gold.

However, the last eight months have shown that this relationship is not as simple as it seems. Julien Bittel, responsible for Macroeconomic Research in Global Macro, emphasizes that this type of rapid drop into Doxy has only three times in the last 12 years, and Bitcoin has finally responded positively, but with a significant delay.

More factors explaining the current department

Several macroeconomic factors explain the current insufficient performance of bitcoins despite the weakness of the dollar. The analyst @21_XBT identifies in particular “customs tariffs, DOGE (Ministry of American Government Efficiency), Trade with Jen, Bond Revenue and Economic Growth” as short -term disturbing elements.

The measures taken by Trump’s administration, including budget reduction and increase customs duties, created an uncertain economic environment. Although these policies may be positive in the medium term, reducing US debt and improving business balance causes short -term turbulence that affects all risk assets, including bitcoins.

It should be noted that the positive effects of weakening the dollar to bitcoins historically lasted between six months and several years. For example, after a significant decrease in DXy in November 2022 Bitcoin did not start its real ascent only a few months later.

Long -term Bitcoin foundations remain solid despite this period of temporary DXY department. As several analyzes show, global financial conditions are quickly softened, which should ultimately benefit assets like bitcoins.

Given that central banks accept more expansionist monetary policies to stimulate the economy, current macroeconomic concerns are likely to disappear. This development could open the way for a new historical record. Some analysts even predict that Bitcoin could reach $ 126,000 in June 2025, confirming that the current dollar department is only temporary.

FENELON L.

Passionate Bitcoin, I like to explore meanders blockchain and cryptos and share my discoveries with the community. My dream is to live in a world where privacy and financial freedom is guaranteed for everyone, and I firmly believe that Bitcoin is a tool that can make it possible.

Renunciation

The words and opinions expressed in this article are involved only by their author and should not be considered investment counseling. Do your own research before any investment decision.