jakiro
Author: Marie Poteriaiev, CoinTelegraph; Compilation: Baishui, Bitchain Vision
summary
-
Lynn Alden said the depreciation of the dollar is crucial to the United States’ stabilization of its financial system.
-
Bitcoin and gold are expected to benefit from de-dollarization.
-
As the dollar’s global dominance begins to weaken, sovereign wealth funds and countries have begun to increase their holdings of Bitcoin.
The weakening of the US dollar (DXY) is no longer a headline.As the US economic turmoil intensifies, the depreciation of the US dollar has become one of the background factors.The U.S. dollar index has fallen 11% since the beginning of 2025 and is currently hovering around its levels since April 2022.The market mostly shrugged.After all, isn’t it expected that the dollar will weaken during the period of deep restructuring?
The problem is that this may not be a temporary decline.The decline in the US dollar may reflect a deeper and longer-term reconstruction of the US economy and global monetary order.Independent market analyst Lyn Alden made a compelling point in a May 4 newsletter:The dollar may not only weaken, but may also be necessary.Alden believes thatRestrained abandonment of dollar hegemony may be one of the few ways to stabilize an increasingly fragile system.If the United States abandons its centrality in the world of currency, the world will need other options.Neutral assets such as gold and Bitcoin may be able to play a more central role.
The United States and the US dollar are in a “long-term transformation”.
The partial reserve banking system on which fiat currencies rely is created by lending.Each time a bank issues a loan, it expands the supply of broad money, but it does not necessarily create enough base currency to repay the principal and interest of the loan.This means that the current financial system relies on sustained credit expansion and refinancing to maintain solvency.
Currently, the U.S. economy holds about $102 trillion in public and private dollar-denominated debt, with an additional $18 trillion being held by borrowers outside the U.S.This does not include derivatives, which will significantly increase the total amount.
However, in fact, only $5.8 trillion of the base currency exists.
“It’s like a chair grabbing game, each chair has over 20 kids,” Alden wrote.“And the music won’t stop for too long.”
The United States plays a special role in this system.It imports more than exports, while surplus countries reinvest their dollar earnings into U.S. stocks, bonds, real estate and private equity.For US$18 trillion in liabilities held overseas, non-U.S. entities hold approximately US$61 trillion in US dollars assets.But when dollar liquidity tightens—when everything stops—foreign holders often have to sell these assets to pay off debts, which in turn threatens U.S. financial stability.
This happened in March 2020, when some of the U.S. Treasury markets fell into freeze during the peak of the COVID-19 pandemic.The Federal Reserve intervened and quickly opened emergency swap quotas with foreign central banks and issued trillions of dollars in base currency to resupport the market system.This solved the liquidity problem, but triggered inflation, hitting low-income Americans the hardest.
Coupled with decades of industrial recession and widening social disparities, this situation ultimately created a political empowerment for Donald Trump and his protectionist agenda.However, Alden believes that the tariff shock is unlikely to succeed.The current system means that the United States must maintain a structural trade deficit in order to provide enough US dollars to the global economy to maintain its dominance.The only way to rebalance trade flows is to weaken the dollar and abandon monetary hegemony.
As Alden said,“I think the U.S. and even the global financial system are likely to begin a very long-term transformation.”
The relationship between Bitcoin and the US dollar index
BTC and the US dollar index are negatively correlated.As the dollar strengthens, risky assets like Bitcoin (BTC) will weaken their appeal to investors.When the dollar weakens, BTC is not only more attractive as a speculative tool, but also as an alternative currency.In a system where fiat currencies must depreciate over time to function properly, the fixed supply of Bitcoin and currency neutrality provide an attractive hedging tool.
Overlaying the BTC and U.S. dollar index charts shows that the significant divergence between the two usually coincides with Bitcoin’s trend reversal.In April 2018 and March 2022, this division heralded a bear market, while November 2020 marked the beginning of a bull market rebound.
During the 2023-2026 cycle, BTC caught up with the US dollar index in early 2024, and the trends of the two were not basically synchronized until recently.In early April 2025, the two began to have obvious differences, with the US dollar index falling below 100 for the first time in two years.
If past patterns can be used as a reference, this may herald the beginning of a new round of Bitcoin’s rise.If the United States strategically weakens the dollar in the long run, its impact may well exceed Bitcoin’s usual cyclical price trend.
1-day chart of USD Index (DXY) and BTC/USD.Source: Marie Poteriaiev, TradingView
Where to invest in the post-dollar era?
As we all know,It is difficult to deal with during periods of currency turmoil.While short-term strategies may vary, long-term strategies point to neutral, high-quality reserve assets—especially those that are expected to benefit structurally from de-dollarization.
Gold meets this requirement, and so does Bitcoin.
Some sovereign entities are already hoarding Bitcoin.El Salvador and Bhutan are buying and mining bitcoins directly.Mubadala Investments in Abu Dhabi and Pension Funds in Wisconsin hold Bitcoin through spot Bitcoin ETFs.More than a dozen states in the United States hold stakes in Michael Sailer’s Strategy, in addition to more than 13,000 companies and institutions.Even the world’s largest Norwegian sovereign wealth fund holds Bitcoin through shares in Strategy, Mara Holdings, Coinbase and Riot.
As the US dollar exits the global financial stage, other currencies will have greater room for development.More and more international trade transactions are settled in RMB, Dhhh or other national currencies.According to Reuters, cross-border RMB payments soared to an all-time high in March.The euro is also rising, with a 10% appreciation against the dollar since February.Given that the ECB has been continuously cutting interest rates, the current interest rate is only 2.5%, far below the Fed’s 4.5%, the appreciation of the euro is even more impressive.
The controversial “de-dollarization” is no longer a fantasy, but is being unfolded in real time.Bitcoin’s borderless and politically neutral nature makes it a strong competitor as countries and businesses seek stable, neutral alternatives to trade settlement and value storage.
