Bitcoin and dollar rates are falling, but that can’t be for long

At the beginning of July, the exchange rate of the US dollar against the euro fell by 3.5% in just 7 days. That may sound like very little, cryptocurrencies naturally rise and fall much faster in value. But for the dollar, this was the biggest price swing since the end of 2022. But bitcoin (BTC) has not really reacted to this so far. That can’t stay that way for long, analysts warn.

Countries no longer want the dollar

The reason for the significant drop is, as always, difficult to say with certainty. In any case, it is striking that around that time it became known that the BRICS countries want to introduce a shared currency backed by gold.

The BRICS countries were originally Brazil, Russia, India, China and South Africa, but more and more countries seem to want to join the group. According to Bloomberg 19 different countries are already interested, including Saudi Arabia, Iran and Indonesia.

That is important, because currently all these countries depend mainly on the dollar when trading commodities. The US dollar is the global reserve currency, which keeps its value relatively stable and makes it easy to trade all kinds of goods with dollars. But if a large number of countries adopt a new currency, it could mean bad news for the dollar.

Falling dollar good for bitcoin?

But a falling dollar is not necessarily bad for bitcoin and other cryptocurrencies. That writes CoinDeskwho spoke with Noelle Acheson, former head of CoinDesks and Genesis’ research division and author of the Crypto is Macro Now newsletter.

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She thinks the dollar and bitcoin cannot be positively correlated for long. After all, Bitcoin is theoretically a protection against a declining dollar. The crypto market mainly relies on buying and selling with dollars. If the dollar falls in value, then that is in principle already favorable for crypto. Also, a declining dollar gives people with dollar-denominated debt some breathing space. All in all, crypto seems to have a good chance of favorable market conditions.

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