For several weeks, the US dollar index (DXY) has dropped significantly, but unlike investors' expectations, Bitcoin does not display parabolic growth usually associated with this phenomenon. This article analyzes the causes of this anomaly and its potential implications.
The historical relationship between bitcoin and the US dollar in question
On March 7, 2024, the US dollar index dropped to 103.60, after reaching 107.6 on February 28, marking a drop of almost 4 % in just a few days. Historically, this situation creates a favorable environment for Bitcoin, which is generally considered to be a refuge value against the weakening of the dollar.
Until the middle of the year 2024, the reverse correlation between Dxy and Bitcoin was almost a certainty for analysts. When the dollar was weakened, the Bitcoin appreciated. This dynamic was explained by the positioning of the queen of cryptos as protection against inflation, thanks to its fixed monetary policy and its limited offer, similar to digital gold.
However, the last eight months have shown that this relationship is not as simple as it seems. Julien Bittel, head of macroeconomic research at Global Macro Investor, underlines That this type of rapid fall in the Doxy has only occurred three times in the past 12 years, and each time, Bitcoin has finally reacted positively, but with a significant delay.
Multiple factors explaining current decoupling
Several macroeconomic factors explain the current Bitcoin underperformance despite the weakness of the dollar. The analyst @21_xBT identifies in particular “the customs tariffs, the DOGE (Department of US government efficiency), the Yen Carry Trade, bond yields and fears of economic growth” as short -term disturbing elements.
The measures taken by the Trump administration, including budget reductions and the increase in customs duties, have created an uncertain economic environment. Although these policies can be positive in the medium term, by reducing American debt and improving trade balance, they cause short -term turbulence that affects all risky assets, including Bitcoin.
It should be noted that the positive effects of the weakening of the dollar on Bitcoin historically took between six months and several years to materialize. For example, after the significant decline in DXY in November 2022, Bitcoin did not start its real ascent until several months later.
The long -term fundamentals of Bitcoin remain solid despite this period of temporary decoupling with the DXY. As several analyzes indicate, the global financial conditions are rapidly softened, which should ultimately benefit assets such as Bitcoin.
As central banks adopt more expansionist monetary policies to stimulate the economy, current macroeconomic fears will likely fade. This evolution could open the way to a new historic record. Some analysts even predict that Bitcoin could reach $ 126,000 in June 2025, confirming that the current decoupling with the dollar is only temporary.
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