Bitcoin may get fresh support for a record-breaking year in 2021 thanks to the demise of a familiar foe: The U.S. dollar. The dollar is selling at nearly three-year lows against different currencies and five-year lows against the Swiss franc, as various reports noted this week.
Weakness in the dollar tends to convert into strength for Bitcoin, and 2020 has become the year in which the US Dollar Currency Index (DXY) has been a reliable reference for market direction.
Throughout 2020, an inverse correlation was palpable, and although Bitcoin’s partnership with DXY has recently broken down, analysts remained confident that the new lows were just positive news for the cryptocurrency. The latest threats weakening the dollar are a combination of revived expectations of global economic growth and a recent coronavirus stimulus package. Tuesday’s DXY reached 91.1, its lowest since April 2018.
John Doyle, vice president of dealing and trading at Tempus, told Reuters, “When you get a report that a bipartisan stimulus deal can get done after hopes have been dashed, it’s just another reason to bid risk up and sell the dollar,”
As ever, even Bitcoin skeptic Peter Schiff, completely enamored with gold, decided on the fate of the dollar with hodlers. “The U.S. dollar is now trading at its lowest level against the Swiss franc since Jan. of 2015,” he noted on Wednesday.
“This is a harbinger of things to come. The franc is leading the way, but other currencies will soon follow. 2021 may be the worst year ever for the U.S. dollar, at least until 2022.” Meanwhile, Schiff’s devotion may soon be rewarded on the subject of gold as the precious metal bounces back from its present lackluster performance. The founder of the cryptocurrency asset management giant Grayscale, Barry Silbert, announced that this month the company has brought back its “Bitcoin-not-gold” advertisements, a development that suggests that the industry agrees that gold has bottomed, one analyst stated.