Falling DXY part of US financial system’s ‘long-term transition’ — Will Bitcoin continue to shine?

What to know:

• Lyn Alden said a weaker dollar is required for the US to strengthen its financial system.

• Bitcoin and gold are well positioned to benefit from de-dollarization.

• The funds of the sovereignty and various countries are increasing their exposure to bitcoin as the global dollar dominance begins.

The weakening of the US dollar (DXY) is no longer news on the headline. In mounted of interruptions throughout the US economy, a greenback decline has become part of the backdrop. Due to the start of 2025, the US dollar index dropped 11%, now walking around the levels last seen in April 2022. The markets responded further with backwards. After all, in times of deep adjustment, isn't the dollar's weakness expect?

The problem is, it may not be temporary sinking. The dollar slide can reflect a deeper, long-term repair of both the US economy and the global financial order. On one May 4 NewsletterThe independent market analyst Lyn Alden has made a compelling case: not just a weaker dollar, but may be required. According to Alden, a controlled retreat from the dollar hegemony may be one of the few paths left to stabilize a more fragile system. And if the US leaves its role in the middle of the financial universe, the world will need successors. Neutral properties such as gold and bitcoin can be well achieved to achieve a more central paper.

The US and the dollar are in a “lasting move”

The fractional reserve banking, the money -dependent system, creates money by lending. Each time a bank releases a loan, it expands the supply of extensive money, without having to create enough base money to cover its debt principal and interest. This means that the current financial system depends on the continued expansion of credit and re -resignation to remain solvent.

Today, the US economy holds around $ 102 trillion in public and private dollar debt denomination, with another $ 18 trillion owed by lenders outside the US and also not counting derivatives, which will push the total higher.

But only $ 5.8 trillion in base money really exists.

“It's like a game of music seats with over 20 kids for each seat,” Alden wrote. “And the music can't stop for long.”

The US plays a special role in this system. It imports more than exporting it, as excess countries make their dollar revenue back on American stocks, bonds, real estate, and private equity. For $ 18 trillion on the dollar responsibilities held overseas, non-US entities hold nearly $ 61 trillion in US dollar assets. But when the dollar of liquidity is strict – when the music stops – foreign holders often sell those possessions to serve their debts, which, in turn, threatens US finance stability.

This happened in March 2020, when parts of the Treasury market were frozen during the peak phase of the Covid-19 Pandemic peak. The Fed enters, quickly opening emergency swap lines with foreign central banks and printing trillions at base currency to recreate the system. It resolved the issue of liquidity but released inflation, which handles the lower American income.

Combined in decades of denying industrial and expanding society gaps, this situation eventually created the political mandate for Donald Trump and his protectionist agenda. However, shock shock is not likely to be successful, Alden argued. The current system suggests that the US should run trade structural deficiencies to provide the global economy with ample dollars to maintain greenback dominance. The only way of re -balanceing trade flows is by a weak dollar and a step back from the financial hegemony.

As Alden puts in,

“I look at the United States and in fact the global financial system is likely to start a lengthy move.”

The relationship of bitcoin to dxy

Bitcoin (BTC) and DXY are inversely correlated. When the dollar reinforces, risk assets such as BTC lose some of their appeal to investors. When the dollar is weakened, the BTC becomes more appealing -not only as a speculation, but as an alternative money. In a system where fiat should effectively lose the amount of time to work, the fixed supply of bitcoin and neutrality neutrality offers a compelling fence.

The saving of BTC and DXY charts shows that the major differences between the two often aligned with the returns of the Bitcoin trend. During April 2018 and March 2022, such differences -the bear markets signed, as November 2020 marked the start of a bullish rally.

In the 2023-2026 cycle, the BTC caught DXY in early 2024, and the two moved largely to sync until recently. A clear difference -began at the beginning of April 2025, with DXY coming down 100 for the first time in two years.

If previous patterns are any guide, it can be signed by starting a new BTC rally. And if the US is moving to strategize the dollar in the long run, the impact can be extended beyond the usual Bitcoin price action.

Related: How many bitcoin can Berkshire buy?

Where to invest in a post-dollar period?

Times of financial chaos are known to be difficult to navigate. While short-term tactics may vary, longer techniques point to neutral, high-quality assets of the rears-especially those standing to benefit structures from the de-dollar.

Gold fits into this bill. So is Bitcoin.

Many sovereignty entities are in Bitcoin. El Salvador and Bhutan are BTC's buyer and mining directly. Abu Dhabi's Mubalad Investment CO and the US state of the Wisconsin's Pension Fund have exposure through BTC ETF spot. A dozen US states hold equity in Michael Saylor's approach, as well as more than 13,000 companies and institutions. Although Norway's highest wealth funds, the world's largest, has exposure to Bitcoin by its handling approach, Mara Holdings, Coinbase, and Riot.

With the dollar from the global financial arena, the space will open for other currencies. There are more examples of international trade deals organized in Yuan, Dirham, or other national currency. Reuters Report Cross-border yuan payments advanced to a record in March. The Euro has also risen, getting 10% against the dollar since February. This is all the more wonderful -awareness that the European Central Bank continues to cut interest rates, now standing at only 2.5%, less than 4.5%of the Fed.

Lots of “de-dollarization” is no longer hypothetical. It tells of real time. While countries and companies are looking for stable, neutral alternatives to resolve the value of trade and stores, the border of bitcoin and political neutral positions in nature as a serious contender.

This article does not contain investment advice or recommendations. Every transfer of investment and trading involves risk, and readers should conduct their own research when deciding.