In the same period, bitcoin has appreciated by 50%.
The loss of dollar strength favors non-sovereign assets, such as bitcoin.
The dollar index (DXY) accumulates 220 days below its annual average, which remains above 100 points. This prolonged trend reflects the greenback’s weakness against other currencies and coincides with a sustained rise in bitcoin (BTC).
As seen in the following graph, in the last seven and a half months, the DXY has remained mostly below 100 pointsprevailing levels between 98 and 99 points:
Since the beginning of this year, the performance of the dollar has shown a constant deterioration, accumulating losses of 10%. This has made the DXY, which measures the greenback in a basket of different national currencies such as the euro, the yuan and the pound sterling, is at levels not seen for almost four years.
As analyst Daniel Arráez sees it, consulted by CriptoNoticias, the purchasing power of the US dollar “has been diluting” in recent months.
This situation has favored the movement of capital towards assets considered alternatives to the traditional monetary system, including bitcoin (BTC) and other cryptocurrencies.
In the same 220 days that the US dollar has remained erratic and bearish, bitcoin is up by 50%going from USD 75,000 to the current USD 123,000, as shown in the following graph:
The behavior of both assets maintains a correlation that, although not immediate, has been repeated consistently. When the dollar loses value, increases interest in instruments that function as a store of value or promise of growth. In this context, demand for bitcoin has gained traction, driven by the search for refuge from persistent fiscal deficits and structural inflation in major economies.
As CryptoQuant community financial analyst alias “Darkfost” sees it, the current “erosion of confidence in traditional economies, weighed down by persistent deficits and structural inflation, continues to drive demand for non-sovereign assets.”
“Bitcoin, and potentially other cryptocurrencies, can serve as a hedge against this dynamic, offering a way to invest outside the dollar system and traditional fiat currencies,” points out.