The S & P 500 decreased by 1% on February 20, while the US dollar weakened the foreign currency basket, the lowest in 70 days. In the last six months, BTC (Bitcoin) has a positive correlation with the US dollar index (DXY), and traders have questioned whether the crystal is on the horizon.
Dxy index (left) vs. bitcoin/USD (right). Source: TradingView / COINTELEGRAPH
It is difficult to directly connect the causes and effects in the relationship between the DXY index and the price of Bitcoin, but all of them benefited from September 2024 to January 2025, which had difficulty in maintaining strength.
Some analysts argue that Donald Trump’s presidential elections can strengthen domestic currencies by promoting fiscal training. However, regardless of whether it is due to previous administration, recent data suggests potential ‘divisions’ by showing the US’s continuous inflation and weakness of retail sales.
It’s too early to evaluate the overall influence of import tariffs and government budget cuts, but on February 14, Larry Adam, the chief investment officer at Raymond James, emphasized a 0.6%negative impact on US GDP growth and warned inflation. It can increase 0.5%. This scenario is essentially not weak for Bitcoin, but can weaken investors’ dangerous appetite.
The price of the DXY index pressure bitcoin, but the trend may weaken.
On February 20, Scott Bessent, US Treasury Minister, said the government is not yet going to issue long -term debt. “This is a long way. Despite the initial criticism of Janet Yellen, who preferred short -term debt, the previous administration’s approach has not changed.
Bessent explained that the transition to long -term bonds depends on the market situation and inflation trend, and the current situation is caused by “bidenflation.” But Bessent pointed out more problems that “it would be easier to extend the period when not competing with the US Federal Reserve Bank, which was a” big seller of government bonds. “
A positive correlation with the DXY index puts pressure on the price of Bitcoin. However, this trend can weaken as investors convert their views on Bitcoin from dangerous assets similar to ‘digital gold’ to insufficient hedge. Some of the shifts are led by some US states that have introduced the bill so that Bitcoin can be a preliminary asset.
On February 19, Montana’s business and the Labor Commission passed a bill to create a special profit account for investments in precious metals and bitcoin. Other states, including Utah, Arizona, Oklahoma, Illinoi, Kentucky, Maryland, New Hampshire, New Mexico, North Dakota, Ohio, Pennsylvania, South Dakota and Texas, also proposed a bill for the Bitcoin protection zone.
On February 20, Bitcoin prices have moved to more than $ 98,000, suggesting that investors are increasingly difficult to recognize monetary policies. If the government’s government efficiency department meets the goal of reducing spending, it is particularly related to the high risk of adopting an extensionist monetary policy, such as issuing $ 5,000 checks to all US households.
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As the precious metals reached a record high on February 19, investors’ prudent feelings are clear. Instead of focusing only on the performance of the US dollar compared to other currencies, the trader must focus on how to evaluate Bitcoin. . The Czech National Bank Governor Aleš Michl emphasized the importance of evaluating Bitcoin’s potential as a preliminary asset.
Ultimately, Bitcoin’s all -time route depends mainly on the inflow of the Bitcoin Exchange Transaction Fund (ETF) and the preferred vehicles for institutional investors. In the distant investor data.
This article is for general information purposes and should not be considered legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.