‘Fiat is fading’ — USD lowest in 3 years as Bitcoin reclaims $107K

Analysts say the US dollar hasn’t shown its usual safe-haven strength during the recent Iran-Israel conflict, while Bitcoin is rising in another attempt to reach its $111,970 all-time high.

“The dollar index is dabbling in new cycle lows today,” macroeconomist Lyn Alden said in a post on Wednesday. “Barely got any flight-to-safety bid in the past couple weeks, either,” Alden added.

“Fiat is fading,” says analyst

Echoing a similar sentiment, Real Vision crypto analyst Jamie Coutts said that “fiat is fading.” The US Dollar Index (DXY), which measures USD’s strength against the world’s major currencies, is trading at its lowest point since February 2022, sitting at 97.50 at the time of publication, according to TradingView data.

The DXY is down 1.54% over the past month. Source: TradingViewIt’s now near the same level it reached on June 13, when tensions first escalated after Israel launched airstrikes on Iran.

In situations like this, market participants usually expect a shift from riskier assets like cryptocurrencies into safer options such as the US dollar or government bonds. In October 2024, a major missile strike by Iran targeting sites across Israel led to the DXY spiking 2.67% over the month.

Traders are highlighting Bitcoin’s recent strength

While the US dollar didn’t surge during the recent conflict, Bitcoin (BTC) experienced volatility.

On Sunday, Bitcoin briefly dipped below $100,000 for the first time since early May. However, since US President Donald Trump’s fragile ceasefire took effect on Monday, it has since bounced back, trading at $107,930 at the time of publication, according to CoinMarketCap data

Bitcoin is down 0.29% over the past month. Source: CoinMarketCapCrypto analyst Matthew Hyland said that the “bulls are in control,” while others point out Bitcoin’s strong resilience despite recent risk-off conditions.

Crypto is today’s emerging market trade

“Bitcoin has broken two 2-week downtrends over the past month,” crypto analyst Rekt Capital said on Wednesday.

Real Vision’s Coutts drew comparisons between the current macro environment and the early 2000s, when a weakening dollar led to a capital rotation into emerging markets and commodities.

“If you remember 2002–2008, the last major dollar depreciation lit a fire under EM equities and commodities,” Coutts said.

Related: Bitcoin bulls halt $4K BTC price dip as US dollar hits new 3-year lows

“EM outperformed DM by 3x as capital chased high-growth, young economies — giving rise to BRICS,” he said, adding that the new emerging market is crypto:

“Crypto is today’s EM. Capital is moving where the energy is,” he said.

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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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