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

[Sinzu_]

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?

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[NotATether]

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.

[bayu7adi]

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.

[Oshosondy]

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

They are indirectly proportional. But do not let it deceives you, when you see the price of bitcoin falling, people are selling bitcoin is what that is happening.

If you see bitcoin rising, people are buying bitcoin.


Although after some long period, dollar devaluation will become noticable but people do not see it as it is kind of hidden unless you are expert enough to calculate it.

[sesterceshop]

Think of Bitcoin like a financial superhero that comes to the rescue when the value of the dollar takes a hit. When the dollar's value goes down, Bitcoin tends to rise in value. This is because Bitcoin is like a treasure chest with only 21 million coins inside, making it really rare and special. So, when inflation shows up, people find Bitcoin super attractive.

But since it can get quite volatile in terms of price, when folks feel pretty good about the dollar, they might ditch some of their Bitcoin for less volatile stuff. That can make the price of Bitcoin take a dip. The Bitcoin-dollar relationship is like a complicated dance that keeps changing its moves.

[Tytanowy Janusz]

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

You are confusing causation with correlation.

1- Bitcoin often trades in the opposite way to DXY (not to the dollar, because value of the dollar goes down every day, it never goes up). You can buy 50% less stuff than 20 years ago. Thats the dolar purchasing power chart:


2- DXY pumps when there is a panic in the market (no matter what it is caused by) and this causes investors to migrate from riskier assets to safer ones. therefore, they migrate from exotic fiat currencies to the dollar, sell shares on foreign markets, sell bitcoin. Thats the migration from risky assets to save assets not the migration from old money to new money.

[Upgrade00]

These two organizations stand for opposing ideals—

Bitcoin is not an organization but us a network.

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.

There is no conflict between both. The USD has been around for multiple decades now, Bitcoin is new and serves as an alternative currency moslty used as a hedge fund and for investments.

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

Bitcoin is priced againts the US dollar so if it gets stronger that increases he purchasing power, meaning you can buy more bitcoins with it.
Same thing happens in your local markets. When inflation grows, prices of commodities increases and when it reduces so does the prices of commodities.
The changes in reference to Bitcoin price is not significant.

[retreat]

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

The value of Bitcoin will only decrease if market demand decreases or the number of sales is higher than purchases, whether due to economic factors or other things. It's the same as Bitcoin, in fact if the market demand for USD decreases, the USD value will also decrease accordingly and if market demand increases the value will also increase, even though it's actually more complex, we can simplify it like that.
But if so, why has Bitcoin's value increased so significantly compared to USD in recent years? because people understand that the potential of Bitcoin can revolutionize global financial markets in the future and buying Bitcoin early can provide high profit potential in the future, so even though many people say negative speculation or things about Bitcoin, there are still many people who hold it because of its potential.

[awik p]

the dollar is not only affected by bitcoin transactions, even without bitcoin the dollar has its own legs, as an international standard currency, it is different with bitcoin at this time, when the dollar rises, then when bitcoin transactions form a consolidation area then the price of bitcoin automatically decreases, but what we know that bitcoin price formation is purely from the value of buying and selling, therefore I don't think there is a significant influence between the two

[OcTradism]

Bitcoin vs US dollar correlation.

The correlation is sinusoidal with time and it isn't always negative or positive so statement about its correlation today will not be correct in future when it changes from negative to positive and vice versa.

I stopped watching too many indicators and correlations when I realized that Bitcoin value is not correlated with US dollar, gold, SP500 etc. Its value comes from its blockchain, protocol and decentralization, no censorship, very strong network against 51% attacks and more.

[Nwada001]

the dollar is not only affected by bitcoin transactions, even without bitcoin the dollar has its own legs, as an international standard currency, it is different with bitcoin at this time, when the dollar rises, then when bitcoin transactions form a consolidation area then the price of bitcoin automatically decreases, but what we know that bitcoin price formation is purely from the value of buying and selling, therefore I don't think there is a significant influence between the two

I don't think the dollar is ever affected by bitcoin transactions, as Bitcoin has nothing to do with dollar value control. Bitcoin is a traded currency, and its price is mostly calculated by the dollar. But the price ups and downs of Bitcoin do not define how the dollar can be valued. I guess the dollar's value is most often determined by how high inflation hits it or how well they can resist it, and a strong economy also contributes to its value. While Bitcoin's value and price largely depend on demand,

[rat03gopoh]

Both are different entities that have their own quantity demanded and supplied. Granted, a few percent of traders are in this pair, but it should be noted that volatility in the value of the dollar can be regulated by government policy intervention.
The last few days, dollar to my fiat exchange rate has increased, but that hasn't been able to change the bitcoin trend to bearish.

[hatshepsut93]

The US Dollar (USD) and Bitcoin (BTC) are two separate but interconnected forces that have been reshaping the financial and economic landscape.

Dollar has been dominating the global economy since WW2. Bitcoin these days is insignificant compared to USD - it has a tiny fraction of its marketcap and even a tinier fraction of transactions.

These two organizations stand for opposing ideals—one rooted in conventional financial institutions, the other a forerunner of the digital age.

Financial institutions are not tied to USD. They could operate with Bitcoin if there was demand. Crypto exchanges are financial institutions too. And Bitcoin is not a digital revolution. US dollar has been digital for quite a while.

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 value goes up or down in a chaotic manner, so it could be a coincidence. But there's a strong narrative that Bitcoin is a hedge against inflation, so if dollar is strengthening, there's no need in this function.

[aylabadia05]

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

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.

[Luzin]

Bitcoin value goes up or down in a chaotic manner, so it could be a coincidence. But there's a strong narrative that Bitcoin is a hedge against inflation, so if dollar is strengthening, there's no need in this function.

So far there was not a considerable influence on the condition of money, but economic conditions had the impact we see today. The rise and fall in the value of money does not have a big effect. But rising interest rates and world economic policies always have a big effect, we can see the FED. They ruined some Bitcoin moments. Besides, as long as users believe in the value of Bitcoin, I think Bitcoin will always be valuable.

[Jawhead999]

You're a shallow thinker, there's no correlation between the rise of Bitcoin price will make Dollar price declining and vice versa. It was been expected, Bitcoin price will increase in the long run while Dollar value will decrease due to inflation.

If you think digital innovation is the main difference of traditional money, you need to touch the grass because mobile banking and digital fiat have been around before Bitcoin exist.

[Bitcoin Smith]

The only relation is BTC value is quoted in USD value for example when we trade on exchange that is the only relation between USD and Bitcoin. In case if USD falls down to zero over night which may affect the price of BTC a bit or huge in short term due to the Market sentiment but BTC will start to rise again irrespective of USD's state.

[Dave1]

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

I don't know where you got this idea, as others have said there is no relation to the price of BTC to dollar.

BTC is just given a dollar value though as we have to "exchange" this digital currency to fiat. But if you can stay full BTC and in the future people are going to treat it as sound money then we could have other options, and the exchange could be even in your own local fiat=BTC.

[hd49728]

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.

[Nrcewker]

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

Does the price only goes down? Dude you need to understand that USD and Bitcoins are completely different entities and have different perspective. USD are particularly currency and it’s price goes up and down due to the country’s economy. Whereas Bitcoins are treated as an asset by majority of the people and it isn’t governed by any ruling body. Hence comparing both of them is basically useless. Digital innovation surely has an upper hand if you ask me over traditional money.