Bitcoin Forum

I found myself thinking that bitcoin may have a serious relationship with dollar as this relation can be showed in inflation/deflation phenomena but what encounters logic of the rules of inflation/deflation is that bitcoin has increase and decrease at the same time and exponentially . Thus How can we suppose that bitcoin may break the rules of inflation/deflation and some economic rules ?And can bitcoin remains faithful to US dollar?

You will have to be more clear than that if you want a meaningful discussion.

In brief i want to know how deep relation between US dollar and bitcoin can break the rules of up and down of bitcoin and dollar ?

I will more clarify my question . how trade can break the rules of increases and decreases of bitcoin and dollar?

Frankly I don't exactly understand what you try to say.

Bitcoin doesn't break any economic rules. In regard to scarcity, Bitcoin is much more scarce than the USD, that is subject to so called "Quantitative Easing", meaning that the number of monetary units is steadily increasing without an upper limit. So inflationary devaluation of the USD is a certainty.

On the other hand, Bitcoin's monetary supply is limited to 21 million coins that are released in decreasing amounts based on actual work (mining) done. So while on a technical level Bitcoin today is inflationary as well, it functions like a deflationary currency, because the demand for Bitcoin outmatches the supply rate that can't be increased.

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Dollar is no doubt a main currency but that time is not far away that bitcoin will be main and only currecny of the world. It will be the global currency. Maybe at this time of writing this post, its seems a wish that cant come true, but you never know in 50 Years USD will be only history and Bitcoins everywhere and every country main currency.

Bitcoin value is still up over 200% in USD value from this time last year. That Bitcoin value has not only survived on a global basis for more than five years, but thrived, and attracted some of the largest merchants worldwide.

Bitcoin has went from 0.25 USD to 678 USD at the time of writing, Dollar scarcity?, the Federal Reserve can make any amount of Dollar bills at any time, I don't believe in such scarcity.  ::)
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 Bitcoins price inflation and deflation is not dependent on the amount of dollars rather it is dependent on the buy and sell in the market. What makes the price of bitcoin goes up and down is the demand in the market and the remaining supply of bitcoin. Bitcoin is very limited compared to dollars. So there no relationship between dollars and bitcoin

Yes. In the short term, the bitcoin price depends on the buy and sell in the market. But the value depends on the usage.

yeah they have pretty good relation as bitcoin wont be so high without dollors i guess as most of the economic moments are affected by dollor as it have great power in the world !

Bitcoin breaks the rules of inflation/deflation because of it having a limited supply that is slowly leaked into the total supply, and it thus deflationary because of there being a hard cap at 21 million coins. Even if it isn't obvious now that it is deflationary, once the next two halvings are done, you'll see  a majority of Bitcoin being mined and thus the price slowly trickle upwards as Bitcoin is destroyed, lost or held. As long as there is a desire for the currency, there is enough for everything else.

If I am getting it right then you are pointing towards similarity in the movement of the price of bitcoin and US dollar.

I think, the inflation and deflation of price of bitcoin are correlated to the movements of US dollar because, although bitcoin price is largest in alternative cryptocurrencies but still it is far less as compared to the US dollar market capital. So when the price of US dollar decreases, you can expect the downwards trend in bitcoin but in fact the price of bitcoin increases in such condition due to the lesser value of consideration. It's exactly opposite to the law of demand and supply.

Dollar is inflationary while bitcoin is deflationary

Nowadays, we cannot deny that dollar so far is the main currency at the present time now.  That's why bitcoin has a serious relationship with dollars, so for now we can't do something about it but to follow what its needs to be follow. Maybe after 1 century bitcoin can be the new world currency as dollar status right now. ;D

Bitcoin need a clear regulatory rules in future if it's to become the benchmark for a world currency. US will not allow that to happen, eventually Bitcoin will attempt to be converted into the center of America continent currency through government policy against most major foreign exchange market, it's their government that will make it that way in future.

In principle of a civilized economy, the currency should be centralized or at least have tremendous market power, the fluctuations and liquidity is a regular trend. When bitcoin community can no longer unstoppable, each world will automatically recognize it.

I guess they have a connection, But there something I had noticed what do you mean  by what encounters logic of the rules of inflation/deflation is that bitcoin has increase and decrease at the same time and exponentially? I'm just kind a confuse. :-[

Bitcoin doesn't increase and decrease at the same time. I'm sorry OP, but I'm not following you there. Bitcoin is deflating, which means as time passes you will be able to buy more and more goods for the same number of coins. In your words we could say it's increasing because the amount of coins in circulation is rising.

i believe OP is seeing the short term fluctuations and calls it "increase and decrease" and then looks at the long term and talks about the exponential growth of bitcoin. and they are both true but i don't get why he is trying to connect it to USD and uses the word scarcity of dollar!!!

p.s. this is an old topic you bumped up.

Bitcoin and USD are inversely correlated. While bitcoin is deflationary because of its limited supply and increasing demand, USD is inflationary because of its increasing supply.

this is somewhat  the supply and demand law. if the price increases, meaning the demand of the market to acquire bitcoin is at high yet there is a small supply in the market because users tend to hold their bitcoins. on the other hand, the price decreases because there are so much supply in the market. and only few demands.

Currently china economic influence bitcoin pricing more than any Economic around the world! And because of this bitcoin will never remains faithful to a single currency like US dollar. I don't think we have a sound proof system against inflation and deflation for now and bitcoin is not an exception.

That is very true since bitcoin can be purchased using Php, Yuan, Euro pounds and many other currencies. This fact tells us that even without the US dollars bitcoin can still flourish, like fore example the pounds will take over US Dollar as the standard legal tender then still bitcoin will still function like it is now. If I were to choose between bitcoin and US dollar I will probably choose bitcoin.

China's influence on bitcoin have decreased a lot. This happened once after the inspection from the PBOC on most of the exchanges. Soon after this few exchanges got shut down and the regulations were made strict. This too is to make their own economy stable.

i agree with you guys.

i remember how the market has been affected by the pre decision of ETF and the result after the rejection.

just weeks before the rendering of the decision, bitcoin price is so high because most people are holding their coin because they are hoping that the ETF will be approved by the SEC and the approval may have a huge impact to the price. BUT what happened is that it has been rejected.. so holders happened to panic sell. by then the supply of the coins in the market went high. sellers are hoping to sell it on a high price before it will fall hard.

so i think this is somewhat a good example too about the supply and the demand thing that affects the price of the bitcoin. and i dont think so that dollars affects the price of bitcoin.

Obviously, this is a false assumption. The fact that the number of monetary units increases doesn't in and of itself mean that the US dollar is less scarce than Bitcoin. Given only that (i.e. just growth in the number of monetary units), we can't even claim that the dollar becomes less scarce on its own. The reason is quite simple, though. There is no abstract scarcity. Scarcity should always be related to something in respect to which monetary unit changes its quantity. More specifically, if the number of US dollars increases but the number of dollar holders and users increases even faster, then you can't possibly say that dollars become less scarce (when in fact they become more scarce). It is basically the same with US dollar scarcity versus Bitcoin scarcity, since just taking into account the number of monetary tokens issued cannot give any definitive answer (we should also consider the number of users of these currencies). If you are going to flare up and spit out curses, think twice before doing that since you are flat-out wrong here

Regarding the OP's question, I didn't quite understand what he meant to ask either

i think have relationship about bitcoin price with dollar value but not big affect
bitcoin price down is affect bitcoin unlimited issue and about ETF, not big affect about dollar value down price

At the present time now,it's sad to admit for a bitcoin enthusiast like me that dollar still the main currency now in the entire world. But sooner or later bitcoin will be the main and dollar I don't know it maybe disappear or not. But the reality now is that the community all around the world are not yet prepared into bitcoin.

Of course, it is pretty basic law in trading, but we never know what is changing people, why they want to buy bitcoin in such higher price. And the correspond between usd and bitcoin is actually zero, the demand is coming from people not from USD. And if USD changing bitcoin price that means bitcoin to USD will be change too. This is one sided dependency

Yes and as a result, Bitcoin should continue to increase in price relative to the US dollar. This assumes that Bitcoin survives and is not over regulated.

for usd is the currency used for world trade, the turnover is not spared from its inflation, USD strengthened as currency traded with another, because history USD born with independent and refuses help from europe bank. and when it said inflation in USD then the question will be the purchasing power of the market, in some of the world trade and remains using USD, and bitcoin calculate keselurah value of the USD, although other currencies can buy a bitcoin, then there is a big change between different currency to usd for purchase bitcoin, and bitcoin price makes the increasingly uphill.

The dollar is the main and most reliable currency, short of gold. And bitkoyn is simply an electronic currency that is not regulated by anyone and is suitable only for short-term investments. Perhaps, even in captivity there are people who do not yet know what bitkoyn is and what to do with it. To break them, it is necessary that bitkoyny become more popular.

Agreed, actually 2 and 3 questions are here in this thread. I want to reply, As i understand this thread. But about inflation and deflation it is a normal part of crypto currencies. In my view, it is a basic rule of economic to make money. Otherwise, talk about US dollar, so it is comfortable for all countries people to convert bitcoin into Dollar, the reason is that Dollar is popular in all over the world.

I don't think Bitcoin and US dollar are so tightly connected. There is coorelation like with other fiat currencies but in sense of inflation/deflation they don't have direct causal relation because different factors and conditions influence on these two currencies. These are normal part of cycle for every currency but I can't see any special connection between dollar an Bitcoin.

Apart from the fact that Bitcoin is mostly quoted in the US dollar

It is the same with gold. Whenever the dollar starts to decline, the gold price starts to rise and vice versa. Since gold is basically forever it's value doesn't get much affected on its own, the change in its value is always caused by indirect factors. For example, the economy of the US starts to decline (or just slows down), people move their wealth into real assets such gold, and gold value rises. And this is apart from purely mechanical dependence between prices of gold and the dollar (as revealed by the USX index). Bitcoin is by far more more volatile on its own, of course, but its price is still negatively correlated with the US dollar mostly

If you ask, can you go to the store and buy food with bitcoin, can you ride the subway to work with bitcoin, I would say know how the world works now is that is all based on fiat money so as long as bitcoin is not accepted we can’t compared to any currency out there, it is more of a type of investment just like gold, so bitcoin and dollar are different from each other.

In my opinion actually both of them is not really related but because we like to used dollar as exchange currency then whenever US dollar price change then bitcoin price will also affected, if we are using different type of exchange currency then it will also affected, so dollar only affected bitcoin because we are using it as the exchange currency and US dollar got inflation and deflation so it is adding the bitcoin swinging price frequency

The question is not about Bitcoin being different from the dollar

Indeed they are different. But that's not my point absolutely. The fact that they are not the same doesn't somehow belittle the
observation that their prices are correlated (negatively). And this is what we should expect since Bitcoin price is most often quoted in dollars. That's why the price of dollar directly and mechanistically affects Bitcoin. But this is not only a statistical relationship but rather a causal one. Moreover, it is unidirectional, i.e. it is Bitcoin that depends on the dollar strength (or rather weakness), but the reverse is not true. In other words, Bitcoin is not dollar's funeral