The Sinking US Dollar and Lifeless Bitcoin: What's Next?
Discussion On The Relationship Between US Dollar and US-Dollar-Backed Assets and Bitcoin.
As of 19th July 2023, in the markets:
1: US Dollar Decline
The US dollar, the official currency of the United States of America, is currently facing a decline in the markets. It is not only the official currency of the United States but is also widely used as a medium of exchange in international trade and financial transactions.
2: Hypothesis and US-Dollar-Backed Assets
The hypothesis suggests that during the US dollar decline, US-dollar-backed assets might experience support or even go up. US-dollar-backed assets are investments tied to the value of the US dollar and can provide stability by reducing currency risk.
3: Examples of US-Dollar-Backed Assets
US-dollar-backed assets include US Treasury Bonds, Money Market Funds, and certificates of deposit (CDs). These assets indirectly expose investors to the US dollar. As the US economy strengthens, the value of these assets in dollar terms is expected to be higher.
4: Stablecoin and Cryptocurrency
Stablecoins like USDT, which are backed by the value of the US dollar, maintain a similar relationship between USDT and Bitcoin as the US dollar and US-dollar-backed assets. Stablecoins play a role in the relationship between the US dollar price and US-dollar-backed assets, which can be complex and vary depending on market conditions.
5: Reasons for US-Dollar-Backed Assets Going Up
A weaker US dollar increases demand for US-dollar-backed assets from investors in other currencies, leading to higher prices. Historical examples, such as the 2008 Financial Crisis, the Dot-com Bubble, and the Post-9/11 Period, support the hypothesis of US-dollar-backed assets going up during a decline in the US dollar.
6: Bitcoin's Relationship with the US Dollar
Historically, Bitcoin has shown an inverse correlation with the US dollar. When the US dollar rallies, Bitcoin tends to decline. A hypothesis suggests that a declining US dollar should lead to a rally in Bitcoin, but currently, this is not observed in the markets.
7: Potential Reasons for Bitcoin's Behavior
Bitcoin's price is influenced by various factors beyond the US dollar, including supply and demand dynamics related to anticipated halving in April 2024 and miners sell-off pressure and regulatory developments with SEC and ETFs. Bitcoin is considered a riskier investment, and factors like regulatory concerns or market sentiment can dampen demand for Bitcoin despite a weakening US dollar. Or is it a simple lagging factor?
Would like to open the topic up for a discussion to explore this in more detail. What are your thoughts on why we are not seeing a rally in BTC as the US Dollar is tanking?
As of 19th July 2023, in the markets:
1: US Dollar Decline
The US dollar, the official currency of the United States of America, is currently facing a decline in the markets. It is not only the official currency of the United States but is also widely used as a medium of exchange in international trade and financial transactions.
2: Hypothesis and US-Dollar-Backed Assets
The hypothesis suggests that during the US dollar decline, US-dollar-backed assets might experience support or even go up. US-dollar-backed assets are investments tied to the value of the US dollar and can provide stability by reducing currency risk.
3: Examples of US-Dollar-Backed Assets
US-dollar-backed assets include US Treasury Bonds, Money Market Funds, and certificates of deposit (CDs). These assets indirectly expose investors to the US dollar. As the US economy strengthens, the value of these assets in dollar terms is expected to be higher.
4: Stablecoin and Cryptocurrency
Stablecoins like USDT, which are backed by the value of the US dollar, maintain a similar relationship between USDT and Bitcoin as the US dollar and US-dollar-backed assets. Stablecoins play a role in the relationship between the US dollar price and US-dollar-backed assets, which can be complex and vary depending on market conditions.
5: Reasons for US-Dollar-Backed Assets Going Up
A weaker US dollar increases demand for US-dollar-backed assets from investors in other currencies, leading to higher prices. Historical examples, such as the 2008 Financial Crisis, the Dot-com Bubble, and the Post-9/11 Period, support the hypothesis of US-dollar-backed assets going up during a decline in the US dollar.
6: Bitcoin's Relationship with the US Dollar
Historically, Bitcoin has shown an inverse correlation with the US dollar. When the US dollar rallies, Bitcoin tends to decline. A hypothesis suggests that a declining US dollar should lead to a rally in Bitcoin, but currently, this is not observed in the markets.
7: Potential Reasons for Bitcoin's Behavior
Bitcoin's price is influenced by various factors beyond the US dollar, including supply and demand dynamics related to anticipated halving in April 2024 and miners sell-off pressure and regulatory developments with SEC and ETFs. Bitcoin is considered a riskier investment, and factors like regulatory concerns or market sentiment can dampen demand for Bitcoin despite a weakening US dollar. Or is it a simple lagging factor?
Would like to open the topic up for a discussion to explore this in more detail. What are your thoughts on why we are not seeing a rally in BTC as the US Dollar is tanking?