Bitcoin (BTC) was the best performer among the large alternative cryptocurrencies at early Monday so BTC re-approached $87,200 as the dollar index crashed to a three-year low. Speculation that former President Trump will replace Federal Reserve Chairman Jerome Powell is fueling the increase. As a consequence, the speculators are shorting the dollar with regard to major currencies. The move represented a bullish resolution to Bitcoin’s recent consolidation between $83,000 and $87,000.
The dollar index fell to 98.5, its lowest level since April 2022, per TradingView data. In foreign exchange markets, hedge funds naked shorted the U.S. dollar. They preferred AA-rated corporate debt and favored AAA-rated sovereign debt in those major currencies, euro, yen, and AUD. At the same time, Bitcoin prices had jumped by more than 2%, tracking a similar rally in gold prices.
"While a trade deal with Japan may be announced soon, the key catalyst today is the perceived threat to Fed independence." - Markus Thielen, founder of 10x Research
Trump's remarks on Truth Social on Thursday, stating that "Powell's termination cannot come fast enough," coupled with repeated calls for lower interest rates, have intensified speculation about the Fed's future leadership. The DXY Index has fallen 10% in three months.
"The move in bitcoin to $87,000 appears to be driven by a sharp drop in the U.S. dollar and a +2% rally in gold, both triggered by Trump's push to replace Fed chair Powell." - Markus Thielen
Large-cap alternative cryptocurrencies, including XRP, Ethereum’s ether and Cardano’s ADA rallied more than 1%. They still fell short of keeping pace with Bitcoin’s absolutely stellar performance.
Early last week, Chairman Powell made headlines for his announcement that the Federal Reserve would not be raising borrowing costs again, at least not for now. Yet he cautioned against the long-term risks of stagflation.
Omkar is the Co-Managing Editor on CoinDesk’s Markets Pro team, based in Mumbai. Prior to this position, he studied currency markets FXStreet and was a fundamental analyst at brokerage firms. Godbole has a master’s degree in Finance and is a member of the Chartered Market Technician (CMT).
