The US dollar is in a desperate situation. The US dollar index (Dxy) flows today at its lowest level in three years.
The weakening of the dollar coincides with the growing concern of a possible recession, the fall in consumer confidence and geopolitical tensions. But could he bitcoin benefit from it?
The US dollar falls quickly
The US dollar index (DXY), an indicator of the dollar force compared to other important currencies, fell This morning at 97,010. It is a drop of more than 10% this year and the lowest price since February 2022.
The low value of the dollar is perceived on the financial markets as a sign of uncertainty. It is precisely at this point that investors are looking for alternatives.
In 2020, the market also experienced great uncertainty due to the current avian influenza pandemic and the invasion of Ukraine by Russia.
The fall of the Dxy was due to a mixture of factors. Despite the peace treatyTensions in the Middle East continue to cause agitation in the financial markets.
At the same time, the American president, Donald Trump, continues to criticize the federal reserve and his interest rate policy. Trump believes Powell should reduce interest rates. This would facilitate debt, which could promote the economy.
Trump’s continuous criticism of Powell erod the credibility of monetary policy. Trump would like to dismiss Powell and already have several candidates in mind to replace him.
Bitcoin will benefit
The market is currently expecting a further drop in the dollar, provided there are no big surprises in economic data.
In a month, 34 days to be exact, the American central bank will make its next decision on interest rates. However, approximately 75% of the market expects interest rates to remain unchanged.
Meanwhile, fear of an economic recession also increases. According to heritage advisor Kurt S. Altrichter, a key sign of an upcoming recession is the drop in interest rates for two years.
This makes the performance curve more pronounced, which is generally an omen of recession. Altrichter warnings: If short -term interest rates drop more, this could mean that Fed loses control.
Meanwhile, cryptocurrencies, especially he Bitcoin seems to benefit from it. While Bitcoin continued to fight for about $ 100,000 this weekend, the currency went to the $ 108,000 brand this week. Currently, the currency cites 107,452 dollars.
Historically, Bitcoin shows a negative correlation with the Dxy: if the dollar index increases, the low Bitcoin and vice versa. However, the persistence of high interest rate can stop price increases.
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