Bitcoin vs. the Dollar (Traditional Money vs. Digital Innovation)

[hugeblack]

The US Dollar (USD) and Bitcoin (BTC) are two separate but interconnected forces that have been reshaping the financial and economic landscape.My question is this, why does the value of BTC decrease when the value of the dollar rises?

Your words are contradictory, as the first statement contradicts the last. If Bitcoin are two separate forces, how are they interconnected? Also, Bitcoin is still in its early days and we have a market capacity less than Windows Apple, silver, such a market and this size of investment will not change the economic equation while we are talking about the US economy with an annual spending rate of more than a trillion dollars and a public debt of about 32 trillion dollars.
Bitcoin is currently far from affecting the global economy, but if it reaches me 10 trillion and 20 trillion, then it will not be affected by the value of the dollar, but will affect it.

[348Judah]

The US Dollar (USD) and Bitcoin (BTC) are two separate but interconnected forces that have been reshaping the financial and economic landscape. These two organizations stand for opposing ideals—one rooted in conventional financial institutions, the other a forerunner of the digital age. The conflict between the dollar and Bitcoin has prompted discussions about the future of money, investing, and the role of technology in forming financial institutions as the global economy continues to change.

How dollar depreciate over a period of time


https://twitter.com/BitcoinMagazine/status/1691536550864035841?t=xIDn_5cH7mgUtB3aqSDWzg&s=19

We can see their relationship from above illustration how fiat will always reduce in value over time, bitcoin will never do that, instead it increases with time when we hold, knowing this is one of the vital reasons why so many people have developed a common interest in bitcoin because they want to have a secured future in their financial economy with bitcoin which will not be affected by inflation and economy losses as we have in fiat system.

My question is this, why does the value of BTC decrease when the value of the dollar rises?

Bitcoin does not decreases in value, fiat does, bitcoin is only volatile and rises and fall in which over every time it go dip there's always an open means to rise back, but fiat loose value with time

[Ucy]

The Bitcoin system is quite different from dollars' hence cannot be said to be interconnected. It's like saying the human & robot brains are interconnected. Both are fundamentally/systematically different and incompatible. It can only become interconnected if you could make them compatible by creating a decentralized dollar that utilizes the Bitcoin blockchain/system or by creating fake Bitcoin that's like the dollar.  Besides, Bitcoin is way superior to the dollar. Both should never be allow to mingle together unless the dollar is ready to change for good. Bitcoin  becoming like the dollar is not an option for me. It will remain decentralized and superior to the dollar, and no one can hijack it.

In regards to why the price tend to be inversely proportional to the other, it's simply the principle of demand & supply. Once one has higher demand than the other, its price may be allowed to increase.

[Agbe]

Op Bitcoin and Dollar are not organization but Currencies please use the correct words. This discussion will not be different from others which we have discussed before. Okay let me put it in this way. Bitcoin is the Messiah that came to save mankind from the financial bondage and bitcoin did not come to destroy the fiat dollar who has been assigned to use all goods and services in the world. Bitcoin came to support the Fiat Currency to do well. Bitcoin can't be use physical and it is use only digitally so if you want to use fiat and you have BTC, you must convert it or sell it with p2p so as you said, BTC and dollar (any other fiat currencies) are moving simultaneously.

[m2017]

Between Bitcoin and USD, their correlation operates inversely. In simpler terms, when investors flock to a strengthening asset, let's say the asset gaining strength is USD, the interest in alternative assets like Bitcoin tends to decrease. This triggers selling pressure that significantly impacts prices. Naturally, investors have to decide which asset is more stable, meaning the one that's gaining strength at that time.

However, in certain instances of Bitcoin's price movement, things don't always unfold as anticipated. For instance, during a global economic crisis, people seek out a Safe Haven Asset. As of now, I would place gold at the top tier of Safe Haven Assets. Consequently, both USD and BTC might experience panicked selling.

I think that it is not entirely correct to compare dollar and bitcoin, because it have a lot of serious differences. For example, the well-known limited and endless emissions. Also, although bitcoin was conceived as a means of exchange (electronic money), at the current moment (most likely in the future it will be the same) it is a means of accumulation (wealth, value), while the dollar is a means of exchange (traditional money) .

There is a trend when investors, under market pressure, change their behavior strategy from investing in btc and usd, but most often, none of them plans to keep their investments in dollars for a long time, because this devalues their wealth due to inflation. That is, the dollar is a safe haven during a market storm, after which investors still rush to the means of accumulation (btc, gold, etc.).

Investors don't necessarily choose the asset that is gaining more power. It may be enough for them that the asset weakens less compared to other assets in order to avoid losses.

Gold has traditionally been considered a safe-haven asset, but now there are alternatives in the form of digital gold. Trends change and investors may switch to new forms of assets.

[aylabadia05]

The trigger for an increase in the dollar can be caused by several factors because in the world of international trade, the dollar is the official currency recognized by the state. While bitcoin depends on the amount of demand and supply. So the impact occurs because globally Bitcoin is traded in dollars.
If we examine further, the value of bitcoin is better even though the frame that is created makes people ignore when the dollar decreases so they are easily fooled.

Puchasing power of US. dollar over time

The article clearly presents fact and comparisons as well as insights about purchasing power of US dollar. The trend is downward that means we have to spend more $ to buy a same thing over time.

In contrast, if it is Bitcoin, since 2009, with 1 bitcoin we will be able to buy more things because both value, price and purchasing power of US dollar increase a lot. In addition, the adoption for Bitcoin has been bigger so we can use bitcoin to buy many things directly.

There, the table gives a comparison that $14.71 was enough to buy 20 bottles of Coca-cola in 1944 and in 2020, $1 only got 1 McDonald's coffee.
From the explanation listed in the table in the article that you shared, it is clear how the dollar compares to the value of bitcoin. It means that in 2020, the purchasing power of 1 BTC can get thousands of McDonald's coffee if I am not wrong in mathematics.

It's no wonder that the frame created makes people easily fooled by interesting facts between the dollar and bitcoin.

[Fivestar4everMVP]

My question is this, why does the value of BTC decrease when the value of the dollar rises?

I dont live in the United States, so i possibly might be wrong, so just correct me if at all, i am wrong.

My opinion is this, Dollar has not been rising, for all i know, no fiat currency has been rising, fiat has one major challenge and that challenge is inflation, the ability of the government to print fiat money at will makes fiat look like they are designed to loss value over time, in fact, not that it looks like, fiat are actually designed to lose value over time, so i honestly do not see how dollar is rising when its purchasing power is getting lower and lower.

Bitcoin on the other hand is not stable currency, the volatility in the price of bitcoin makes it a normal thing for the currency to go down in price when demand is less, and go up in price when demand is high, and also, the limited supply of bitcoin also supports this, so overtime, Bitcoin is designed to keep growing both in price and purchasing power, but like ive said before, it a norm for price to go down when demand is low, and price go high when demand is high, this is also how money is made from bitcoin trading.

[SquirrelJulietGarden]

My opinion is this, Dollar has not been rising, for all i know, no fiat currency has been rising, fiat has one major challenge and that challenge is inflation, the ability of the government to print fiat money at will makes fiat look like they are designed to loss value over time, in fact, not that it looks like, fiat are actually designed to lose value over time, so i honestly do not see how dollar is rising when its purchasing power is getting lower and lower.

Central banks print more money so their fiat currencies have increasing inflation with time. As consequence of inflation, no doubt that purchasing powers for their fiat currencies decrease with time. Inflation and purchasing power have inverse correlations.

Bitcoin on the other hand is not stable currency, the volatility in the price of bitcoin makes it a normal thing for the currency to go down in price when demand is less, and go up in price when demand is high, and also, the limited supply of bitcoin also supports this, so overtime, Bitcoin is designed to keep growing both in price and purchasing power, but like ive said before, it a norm for price to go down when demand is low, and price go high when demand is high, this is also how money is made from bitcoin trading.

Bitcoin is inflationary too but because its total supply was set in 2009 by Satoshi Nakamoto, people have clear information about Bitcoin total supply which can not be changed. With time, they know one  more thing, more bitcoins will be lost by lack of carefulness from people who don't backup their wallets, seeds, private keys well enough.

How is the 21 million Bitcoin Cap defined and enforced?

[Blitzboy]

Okay, genius, let me quickly explain it to you because this seems to be a problem for you. Bitcoin, the digital disruptor, and the US Dollar, the embodiment of fiat money, frequently but not always have an antagonistic relationship. The world has a high level of faith in the traditional banking system and, by extension, fiat currency when the USD is strengthening. Why? Considering it to be the safest bet, everyone is turning back to the good ol' dollar.

When that occurs, overseas investors can see dollar-priced assets like Bitcoin as being more expensive. They leave, which decreases demand and consequently lowers the price of BTC. Got it? And to be honest, anyone with even a basic understanding of how financial markets operate would realise this. Then again, it's better late than never, right?

[kryptqnick]

The USD is not interconnected with Bitcoin. Others pointed out that there's no strong correlation between the two, and that they are incomparable by the scope of usage and influence. I see various explanations in the thread, but honestly, I think that the op might just be confused when asking about the decrease of BTC value when the USD value rises. We measure the value of Bitcoin in the USD for convenience, it doesn't mean that they're literally connected with one another. And the value of dollar doesn't really rise. That would be deflation, and the USD is slightly losing value most of the time, just as fiat is meant to do (inflation).

[hugeblack]

The value of Bitcoin is subject to supply and demand factors, and these factors change every second with an increase in demand or supply, and when an imbalance occurs, the price changes, so you find that the price of Bitcoin changes every second and sometimes it is fixed, while the dollar is the global reserve currency, and the Federal Reserve guarantees its value, so it is tied With the value of the dollar and with promises that the United States will protect its currency, therefore, a more stable price.

The difference between the more stable price and the more volatile bitcoin price is what makes bitcoin sometimes fall against the dollar and sometimes rise.

[348Judah]

In regards to why the price tend to be inversely proportional to the other, it's simply the principle of demand & supply. Once one has higher demand than the other, its price may be allowed to increase.

Many could have wondered as well that why has it been in this way whereby we see the value of dollar depreciating over time whereas bitcoin is increasing, this alone should significantly tells us that there are factors that are running underground which could not allow the USD value to increase over time than to decrease, inflation in many ways have affected the relevance of fiat and reduced it value with because there are policies not working right with fiat monetary system which doesn't exist in a decentralized network with bitcoin.

[taufik123]

-snip-
The difference between the more stable price and the more volatile bitcoin price is what makes bitcoin sometimes fall against the dollar and sometimes rise.

It is because of Bitcoin's volatile characteristics that the price moves significantly against the dollar every second.
Bitcoin is also a relatively new digital asset and looks small when compared to traditional currencies that have existed since the era of world economic growth.

Many market sentiments will affect the price of Bitcoin and Bitcoin is also traded 24/7 and has never stopped until now.
Whereas traditional currency stock trading during the weekend is closed and completely stopped.

The ups and downs of Bitcoin prices are common and can provide quick profits and vice versa.
Bitcoin is decentralized, not regulated by anyone so unilateral regulations will not be able to affect it.

[lionheart78]

My question is this, why does the value of BTC decrease when the value of the dollar rises?

As the earlier reply stated, they are not 1 - 1 in proportion.  The moment the value of the dollar rises, the purchasing power of the dollar increases.  Unless there is enough demand for the Bitcoin market to uptrend, in a normal calculation, the amount of BTC being able to purchase will become higher thus it makes Bitcoin looks like losing its USD value.  The opposite reaction will happen when the value of USD becomes lower.

In other word considering the other factor is the same, USD is inversely proportional to BTC in terms value.

[yhiaali3]

Although the US dollar (USD) and Bitcoin (BTC) are opposite in all characteristics where the dollar is centralized and bitcoin is decentralized and bitcoin maintains privacy while the dollar does not, they are actually two separate and interdependent forces despite being opposite.

Determining the price of bitcoin is directly related to the dollar, so it is natural to see a decline in the value of bitcoin when the strength of the dollar rises, as they are opposite, while if there are factors affecting the price of the dollar negatively, this will reflect positively on the price of bitcoin, although this rise could be imaginary due to inflation. And the dollar lost some of its purchasing power.

This mechanism can be understood through the example of gold because gold and the dollar are also interrelated but opposite, for example when the value of gold rises, this rise is in fact a result of inflation and the dollar losing some of its value and purchasing power while the real value of gold is fixed.

[mendace]

The value of Bitcoin (BTC) can be affected by a variety of factors, including supply and demand, adoption, market news, and global economic conditions.  When the value of the US dollar (USD) goes up, it could impact the price of Bitcoin in a number of ways.

[usekevin]

Op Bitcoin and Dollar are not organization but Currencies please use the correct words. This discussion will not be different from others which we have discussed before. Okay let me put it in this way. Bitcoin is the Messiah that came to save mankind from the financial bondage and bitcoin did not come to destroy the fiat dollar who has been assigned to use all goods and services in the world. Bitcoin came to support the Fiat Currency to do well. Bitcoin can't be use physical and it is use only digitally so if you want to use fiat and you have BTC, you must convert it or sell it with p2p so as you said, BTC and dollar (any other fiat currencies) are moving simultaneously.

The bitcoin and USDT are now most traded cryptocurrency,the people buy USDT for holding the crypto to buy some good coin using the steady price USDT.The bitcoin was long term coin now,the good time to buy bitcoin is the bear market.Now we are facing the bear market,So you can buy some bitcoin for now.If you want to buy USDT for your local people,it's better to buy the USDT in P2B.Some people will get scam by sending FIAT to his fellow country people without getting any dollars.Don't believe any one in the online blindly.

[Ale88]

The US Dollar (USD) and Bitcoin (BTC) are two separate but interconnected forces that have been reshaping the financial and economic landscape. These two organizations stand for opposing ideals—one rooted in conventional financial institutions, the other a forerunner of the digital age. The conflict between the dollar and Bitcoin has prompted discussions about the future of money, investing, and the role of technology in forming financial institutions as the global economy continues to change. My question is this, why does the value of BTC decrease when the value of the dollar rises?

Bitcoin is way more than its counter value in US dollars because there is no inflation, there is no central bank printing more, there is no bank freezing your funds, and you are completely free to send funds to whoever you want whenever you want, without any need of documentation and permits. If you are into bitcoin of course you are because its value will increase but that shouldn't be the only reason.

[fullhdpixel]

In regards to why the price tend to be inversely proportional to the other, it's simply the principle of demand & supply. Once one has higher demand than the other, its price may be allowed to increase.

Many could have wondered as well that why has it been in this way whereby we see the value of dollar depreciating over time whereas bitcoin is increasing, this alone should significantly tells us that there are factors that are running underground which could not allow the USD value to increase over time than to decrease, inflation in many ways have affected the relevance of fiat and reduced it value with because there are policies not working right with fiat monetary system which doesn't exist in a decentralized network with bitcoin.

Those who wonder are lacking of knowledge on how financial system works. Money won't move just like that without a reason. Dollar depreciates due to inflation while Bitcoin can be a good counter to it due to its limited supply. We only need to be honest and say that Bitcoin doesn't increase at all times. Inflations are normal and it doesn't happen because there are anomalies happening around.

Despite of an inflation, most people still use fiats because this is where they used to, and there are still times where we can experience a relief in which inflation rates can decline. People can also do something to help them survive a high inflation period.

[Sinzu_]

They are not 1 - to - 1 correlated.

Nobody really pays attention when the dollar goes down during inflation, because everything is denominated in dollars. Therefore, when you see BTC price go up, that can mean either two things - the market demand of Bitcoin is increasing, or the US dollar is losing value because of inflation while Bitcoin stays at the same demand.

Same is true in reverse - when BTC value goes down, it doesn't necessarily mean that dollar is also going up, perhaps the dollar is remaining at the same value while BTC's own demand diminishes.

Hmm this is truly helpful.... When do you feel is the best time to buy?