The US dollar is experiencing one of its weakest periods in recent years. This is shown by the DXY, an index that measures performance against six important currencies: the euro, yen, pound, Canadian dollar, Swedish crown, and Swiss franc.
Over the past 12 months, the DXY index has fallen by more than 10%. It is currently located at 96.1 points, the highest level since February 2022.
Precious metals also showed the opposite trend last year. In dollar terms, gold rose by about 83% and silver by 248%. Such assets hit all-time highs of $5,100 and $117 (US dollar), respectively, on Monday.
US currency deterioration accelerates Among recent political and geopolitical factors. “What was supposed to be slow, gradual de-dollarization quickly turned into a disaster for the US dollar when Donald Trump decided not only to launch an investigation into Jerome Powell in connection with Federal Reserve spending, but also to threaten a historic ally with tariffs,” market analyst Elior Mani explained.
“Some European funds are selling dollar-denominated bond assets due to concerns about the current administration’s new aggressive policies,” Manny said. “This is contributing to the current decline by actively seeking alternatives and reducing demand for dollars.”
In this context, he added, “This de-dollarization explains the continued rise in gold and other metals,” linking it to the “devaluation trade,” a strategy of investing in scarce assets as a haven from the unlimited printing of fiat currencies.
In that respect, Bitcoin (BTC) does not follow the rise in metals. According to a report from CriptoNoticias, it hit a new all-time high of $126,000 in October, but has since fallen due to macroeconomic uncertainty and business caution. It is currently down 14% over the past 12 months.
Bullish expectations for Bitcoin
Still, DXY’s weakness is fueling bullish expectations for Bitcoin among some analysts. Matthew Hyland recalled, “The last two times DXY fell below 96, Bitcoin went from $2,000 to $20,000 in six months and from $10,000 to $64,000 in nine months.” This can be seen in the following graph.
Beyond predictions, the “year of fear” the dollar is experiencing highlights the decline in the value of fiat currencies. Similarly, it shows the importance of taking refuge in other assets to avoid loss of purchasing power.
(Tag Translation) Bitcoin (BTC)
