The US Dollar Index (DXY) has dropped by more than 10 points since January, recording one of the year--to (-since the turmoil in September 2022.
Analysts believe that continued dollar weakness could have a positive impact on Bitcoin (BTC), potentially moving towards a new all-time high (ATH) against the dollar.
US DXY Dropslines... Bitcoin All-Time High?
According to TradingView data, the US DXY has been steadily declining, falling nearly 10% on a year After reaching an intraday high of 110.176 on January 13, it has now dropped to 100.011, a decline of more than 10 points.
According to Bloomberg, the recent dollar decline may be just the beginning. beginning. Standard Chartered Bank warns that the US dollar could face face a devaluation risk by 2026 if Donald Trump's policies increase national debt without driving economic growth.
Steve Englander, Head of G10 FX Research at Standardard, chartered a note is facing a dangerous combination. Government debt is surging, and obligations to foreign bondcreditors are increasing.
"If the debt path does not flatten, borrowing conditions may become increasingly burdensome as risk prempublic and private borrowing costs."." Steve Englander, Head of G10 FX Research at Standard Chartered
<>, kethat the surge in US bond yields could fears of economic instability,, which could enhance Bitcoin's appeal as an inflation hedge with a fixed supply.
Similarly, Jeff Kendrick of Standard Chartered emphasized Bitcoin's resilience as a hedge against financial and US Treasury risks.
"I believe Bitcoin is a hedge against traditional finance and US Treasury risks." JeffRick,rick, Standardad Chartered
Standard Chartered Signals Dollar Risk
Trump's recent aggressive tariffs and-proposals are already making investors uneasy.
The market initially expected these policies to drive growth, but confidence is quickly fading. Foreign investors are currently holding off completely withdrawing from US assets, but the situation could change rapidly if sustained economic expansion is not achieved p.
"trade policies remainain erratic,, may be hesitant to increase exposure to the dollar, which could trigger a 'distinct' downward movement. Meanwhile, if Europe and China's economic conditions improve, they could draw capital from the US, intensifying selling pressure on – the Steve Englander, Head of G10 FX Research at Standard Chartered, this dollar weakness has been a powerful driver of Bitcoin's recent surge, the pioneering cryptocurrency serving as a hedge against fiat currency currency uncertainty.
"could argue that Bitcoin is reaching new all-time highs because the US dollar is currently very weak. Other major currencies will be the next victims." – Analyst Crypto Rover
Bitcoin against foreignureforeign currencies. Source: Crypto Rover on X
In fact, when comparing Bitcoin's performance against fiat currency pairs EUR, GBP, JPY, Bitcoin's breakthrough is less dramatic against USD, highlighting that much of the's rally is driven by dollar devaluation.
Nevertheless, while Bitcoin is benefiting from short-term weak dollar, the broader macroeconomic implications are more complex.
As foreign investors demand higher yields or avoid the dollars,, rising inflation could cause cause volatility for assets like Bitcoin within a broader risk-averse sentiment.
Nonetheless, Bitcoin appears to be a clear winner amid financial uncertainty, currently trading at $108,485.
Bitcoin (BTC) Price Performance. Source: BeInCrypto
Investors are preparing for an unsustainable debt path and continuing dollar weakness. As a result, Bitcoin's reputation as a store of value and hedge against legal tender erosion is being tested.
While Bitcoin is passing this test, it is also important to note that the BTC price is stagnating in the range of $108,000. Based on this, capital may rotate into altcoins.
Disclaimer: The content above is only the author's opinion which does not represent any position of Followin, and is not intended as, and shall not be understood or construed as, investment advice from Followin.
