The US dollar has weakened, but it has not ignited Bitcoin’s rally as it usually does. This “unusual trend” has attracted market attention. J.P. Morgan Private Bank believes that the key is not Bitcoin itself, but rather that this wave of US dollar decline is fundamentally different from previous ones.
The US Dollar Index (DXY), which measures the dollar’s performance against major currencies, has fallen about 10% over the past year; however, Bitcoin, often seen as a “beneficiary of a weak dollar,” has actually declined by 13% during the same period.
Yuxuan Tang, Head of Asia Macro Strategy at J.P. Morgan Private Bank, pointed out that the recent dollar depreciation is driven by short-term capital flows and market sentiment, rather than changes in market expectations for the US economic outlook or monetary policy.
He mentioned, “In fact, since the beginning of the year, the interest rate differentials have continued to develop in favor of the dollar. The current wave of dollar selling we see is similar to April last year, mainly driven by capital flows and market sentiment.”
Against this backdrop, J.P. Morgan believes that the dollar’s weakness may ultimately be a “phase phenomenon.” As the US economy gradually regains momentum this year, the dollar could stabilize again.
It is precisely because of this that Bitcoin has not exhibited the typical characteristics of a “safe haven asset” for the dollar this time. In contrast, gold has continued to strengthen during the dollar’s decline, while Bitcoin prices have remained volatile within a range, indicating that the cryptocurrency market does not believe that the dollar’s fall will lead to a long-term overall economic shift.
From market performance, Bitcoin currently appears to be a risk asset that is highly sensitive to liquidity rather than a store of value. Until there is a clear shift in monetary policy expectations, a mere weakening of the dollar is not enough to attract new capital to flood into the cryptocurrency market.
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