Many people fail to see the big picture about Bitcoin -and the cryptocurrencies industry in general. Bitcoin investing is hedging against the USD (and all fiat) inflation for the long run, this relatively short 12 years Bitcoin (and Crypto) experiment of enough so far to prove this concept. The crash came alongside a bounce in the Dollar Index (DXY), which tracks the greenback's value against major currencies. The DXY has jumped to two-week highs near 90.50, extending a two-day winning streak. The index reached a 33-month low of 89.21 on Jan. 6, according to TradingView.
The dollar is one-half of the most dominant Bitcoin trading pair on every top crypto exchange. The same goes for nearly every other asset globally, from stocks to gold, and even other nations' currencies. The dollar has been the global reserve currency over the last 100 years. It is the currency on which all exchange rates are based on. Global markets have taken a beating following the US Fed announcing a series of rate hikes in a response aimed at curbing the highest inflation rate in more than 40 years.
Fed Governor Lael Brainard this week claimed a series of rate hikes and aggressive balance sheet runoff would help to quickly correct monetary policy imbalance and take the Fed to more neutral levels. The comments pushed the DXY Dollar Currency Index to a two-year high.
When comparing the SPX (green) movement to that of BTC (orange), it is visible that they are very similar, with the exception that the BTC movement has transpired at a much larger magnitude.
The bad news here is that countries vary in their sovereignty (read economic strength). Accordingly, their economic muscle matters and this explains the existence of the multi-trillion volume a day FX market—a topic for another day.
If the FED—since we are talking about the USD, asserts that its paper creation works perfectly as money—again, who can challenge it? Every central bank follows this model.
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