The U.S. dollar isn’t looking so strong these days. Actually, it’s been weakening quite a bit. According to an investment note from Singapore’s QCP Capital, that’s part of a larger story that might just be good news for Bitcoin. There’s also this thing about the yield curve steepening, and some worries about how central banks are being run. It’s a mix of factors that, well, seems to be building a case for crypto.
A Weaker Dollar and The Search for Alternatives
The U.S. dollar index—that’s the DXY—has apparently dropped about 11% since the first part of the year. It’s sitting around 98.23 now. Stephen Gregory, who founded the crypto platform Vtrader, pointed out that this is the biggest decline we’ve seen since 1973. That’s a long time. And it’s making some big players nervous.
You can see the reaction in gold, which just hit a new record high. Gregory thinks this is a clear sign that major U.S. institutions are trying to protect themselves from a falling dollar. The logic, I suppose, is that if money is moving out of traditional safe havens like gold, it might eventually find its way into other assets that have a limited supply. You know, things like Bitcoin.
What’s Happening in The Bond Market
But the dollar’s slump is only one piece of this. There’s also a pretty significant sell-off happening in bonds. Experts are mostly blaming worries about inflation for why the 30-year yield is jumping in the U.S. and other major economies. Robin Brooks from the Brookings Institution called it “really unusual” for these long-term yields to climb when the Fed is supposed to be easing up.
He noted that a lot of governments have been focusing on short-term debt lately. That decision might be causing some problems now, making long-term borrowing more expensive for everyone. It’s a complicated situation. Most central banks are either cutting rates or getting ready to, which usually keeps short-term rates low. But this bond sell-off is messing with that.
The Yield Curve and Political Pressure
The result is a steeper yield curve. Basically, the gap between short-term and long-term interest rates is getting wider. That means investors want a lot more return to lend their money for a long time. It often signals that people are expecting inflation to pick up, or maybe that they think the economy will grow. It’s not always clear.
There’s another layer to this, though. People are starting to talk more about the Federal Reserve’s independence. The President has been openly pushing the Fed chair to cut rates, probably to help manage the cost of the country’s debt. According to QCP, that kind of pressure is part of why investors are nervous, keeping those long-term premiums high.
What It Could Mean for Bitcoin
So where does Bitcoin fit into all this? Gregory suggests that when inflation is a concern, assets like Bitcoin often do better than the rest of the market. With the dollar weakening and the yield curve doing its thing, he wonders if this might be the setup for a major crypto cycle. Bitcoin is already up around 96% this year, even if it’s down from its peak. Gold is having a great year, too. It makes you think. Maybe money is just looking for a new home.
