The dollar index (DXY) has been below its annual average for 220 days and remains above 100 points. This long-term trend reflects the weakness of the US dollar relative to other currencies and coincides with the sustained rise in Bitcoin (BTC).
Over the past seven and a half months, as seen in the following graph, DXY remains mostly below 100 pointsa typical level between 98 and 99 points:
Since the beginning of this year, the dollar’s performance has been continuously deteriorating, with losses of 10% accumulating. This led to the DXY, which measures the dollar in terms of a basket of different national currencies, such as the euro, renminbi, and British pound. This is at a level not seen in almost four years.
In the view of analyst Daniel Arees, consulted by CriptoNoticias, the US dollar’s purchasing power has been “diminishing” in recent months.
This situation is driving the movement of capital into assets considered as alternatives to the traditional monetary system, including Bitcoin (BTC) and other cryptocurrencies.
During the same 220 days when the US dollar remained volatile and bearish, Bitcoin rises 50%It increases from 75,000 USD to the current 123,000 USD as shown in the following graph.
The behavior of both assets remains correlated, which, although not instantaneous, is consistently repeated. When the value of the dollar falls, Growing interest in products that function as stores of value Or the promise of growth. In this context, sustained fiscal deficits in major countries and the search for escape from structural inflation are fueling demand for Bitcoin.
As CryptoQuant’s community finance analyst, aka Darkfost, puts it, “as confidence in traditional economies erodes, weighed down by persistent deficits and structural inflation, demand for non-sovereign assets continues to rise.”
“Bitcoin, and potentially other cryptocurrencies, can act as a hedge against this movement and provide a way to invest outside of the dollar system and traditional fiat currencies,” he points out.
(Tag Translate)Bitcoin (BTC)
