Bitcoin is holding firm near historic highs as the U.S. dollar tumbles to its weakest level in more than three years, spotlighting the fragile dance between crypto prices and the world’s dominant reserve currency.
The dollar’s slide comes amid a swirl of macroeconomic forces: expectations of looser Federal Reserve policy, signs of easing trade tensions between the U.S. and China, and growing worries that political pressures could undermine the Fed’s independence.
Analysts say those dynamics are reviving Bitcoin’s appeal as a hedge against dollar debasement and traditional financial volatility.
Vasileios Gkionakis, senior economist and strategist at Aviva Investors, in comments to Reuters, said,
“I don’t think it’s just the repricing of the Fed. There’s a broader issue here of some tarnishing of U.S. exceptionalism.”
Markets are currently pricing in around 64 basis points of rate cuts for the rest of 2025, up from 46 basis points expected just a week ago. Speculation is also swirling that President Donald Trump may install a more dovish Fed chair if he perceives monetary tightening as a drag on economic growth heading into the next election cycle.
At the same time, diplomatic progress appears to be calming global nerves. News of a rare-earth trade agreement between Washington and Beijing lifted equities worldwide this week. The pan-European STOXX 600 index rose 0.9% on the day and was poised for a 1.1% weekly gain, while Asian markets surged to their highest levels in more than three years.
Despite Bitcoin’s rally, some analysts caution that its correlation to the dollar isn’t perfectly inverse. Data from CryptoQuant shows that statistically significant negative correlations below minus 0.6 have appeared on fewer than 30% of trading days since 2021. Currently, the 90-day rolling correlation between BTC and the DXY stands at –0.34, suggesting a loose but noticeable relationship.
Others remain skeptical. While corporations, institutions, and government entities are acquiring or holding Bitcoin now, on-chain activity is nowhere near 2021 levels. Active wallets, Lightning Network volume, and transaction numbers have all declined. Bitcoin in 2025 is not about everyday individuals using it for payments or even acquiring. Instead, we’re seeing a value transfer away from retail users to institutions, with a key focus on the United States.
Bitcoin’s price is not necessarily under threat from this on-chain apathy anymore. However, if Bitcoin becomes nothing more than a place for the wealthiest companies and individuals in society to park their wealth, then are we really doing justice to Satoshi’s legacy? ‘Number go up’ is great for all those who bought Bitcoin early, but should ‘freedom money’ really be hoarded by the billionaire class?
The evolving BTC–USD story leaves key questions unresolved:
For now, investors will be watching closely as the dollar’s trajectory and the Federal Reserve’s next moves shape the narrative for Bitcoin in the second half of 2025.
