The Dollar falls sharply as Bitcoin breaks the $107K mark

Analysts say that the US dollar is not showing its usual safe-haven strength amid the recent conflict between Iran and Israel. In contrast, Bitcoin prices are continuing to rise, aiming to reestablish an all-time high of (ATH) 111,970 dollars.

"The dollar index today is hovering around a new cycle low. There has been virtually no safe-haven money flowing in over the past few weeks," macroeconomist Lyn Alden shared in a post on Wednesday.

Fiat is declining

In agreement, crypto analyst Jamie Coutts of Real Vision also believes that "fiat is gradually losing its position." The DXY index – which measures the strength of the US dollar against other major currencies – is currently trading at its lowest level since February 2022, reaching 97.5 at the time of writing.

The DXY has decreased by 1.54% over the past month | Source: TradingViewCurrently, the DXY index is approaching the level recorded on June 13, when tensions escalated due to Israel conducting airstrikes on Iran.

In such situations, investors often expect capital to shift away from risky assets like cryptocurrencies to seek safer options like USD or government bonds. In October 2024, a large-scale missile attack by Iran targeting multiple locations across Israel caused the DXY index to surge 2.67% that month.

The recent strength of Bitcoin

While the US dollar did not rise significantly during the recent conflict, Bitcoin experienced strong volatility. On Sunday, Bitcoin temporarily dropped below $100,000 – the first time since early May. However, since the fragile ceasefire mediated by US President Donald Trump began on Monday, Bitcoin has recovered and is trading at $107,579 at the time of writing.

BTC price chart 4 hours | Source: TradingviewAnalyst Matthew Hyland stated that "the bulls are in control of the market," while others pointed out that Bitcoin is demonstrating strong resilience despite recent risk-off market conditions.

Crypto is the emerging market of today's era

"Bitcoin has broken two downward trends lasting 2 weeks in the past month," analyst Rekt Capital commented on Wednesday.

Jamie Coutts from Real Vision compares the current macro context to the early 2000s, when a weakening dollar led to a shift in capital flows into emerging markets and commodities.

"If you remember the period from 2002 to 2008, the last major depreciation of the dollar sparked a boom in emerging market stocks and commodities. Emerging markets outperformed developed markets by three times, as capital flowed into young, high-growth economies – leading to the rise of BRICS. Crypto is the emerging market of the present. Capital is shifting to where there is energy," Coutts said.

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