Will Bitcoin Benefit from the Falling Dollar?
The US dollar has been put under the spotlight for a number of reasons. BRICS undoubtedly tops the list after its de-dollarization initiative. In the midst of this, Stanley Druckenmiller, a billionaire investor, revealed that he has shorted the US dollar. He believed that the Federal Reserve would soon need to cut interest rates due to a setback in the economy. In what he described as the most uncertain phase of his career, he claimed the move was his lone confident trade while speaking at an event. He added,
“One area I’m comfortable with is that I’m short of the US dollar. Currency trends tend to last two or three years. We’ve had a long [run] higher.”
The investor believed that the dollar would continue to fall. Druckenmiller pointed out that the Fed will take measures to counter the effects of a slowdown in the economy. But if interest rates fall, the value of the dollar will follow.
Although it is certainly bad for the dollar, Bitcoin [BTC] and other investments can take the front stage. The weakening of the dollar is highly sought after by many governments around the world at the moment. While working towards that, individuals are likely to shift their focus to alternative investments such as Bitcoin.
There are two relevant ways Bitcoin can benefit from the dollar fiasco. With the dollar in the back seat, traditional investment tools such as stocks and bonds are likely to underperform. Investors would then look for other investment opportunities. In addition, the value of commodities including digital assets is expected to rise if the dollar continues to fall. This is due to the fact that Bitcoin is considered to be a hedge against major economic downturns.
Bitcoin should thrive when centralized systems crumble
It appears that an upswing may be on the cards for Bitcoin. Along with the aforementioned points, the downfall of First Republic Bank certainly put things into perspective. As the bank crumbled, Bitcoin managed to gain 6% in the last 24 hours. The asset which had recently dipped below the $30K zone was back at $28K.
As seen on the one-hour chart of BTC, the asset experienced a drastic increase in the last couple of hours. The relative strength index [RSI] the indicator further revealed that the king coin was currently overbought. Crypto Twitter started pointing out how Bitcoin was doing much better than stocks as well. All these signs are certainly inclined towards how BTC can enjoy bullish days ahead.
