Bitcoin and other cryptocurrencies experienced a significant rise as investors sold off dollar assets. The U.S. stock market saw a sharp decline, with major indices dropping over 2%, while the Nasdaq fell nearly 4% at one point. The dollar index fell to a three-year low, contributing to the rise in alternative assets like cryptocurrencies and gold.
Bitcoin's price increased by over 4%, surpassing $88,300, marking the highest intraday level since April. Despite this surge, Bitcoin remains about 20% below its all-time high of $110,000 from mid-January. Analysts suggest that Bitcoin is trading between $75,000 and $90,000, with potential for significant gains if it breaks above $90,000.
The dollar's weakness, coupled with former President Trump's criticism of the Federal Reserve, could unexpectedly benefit cryptocurrencies. The dollar index has dropped to a 16-month low, on track for its worst monthly performance since 2009. Analysts indicate that if Trump succeeds in replacing Fed Chair Jerome Powell with a more "dovish" leader, it could be favorable for cryptocurrencies, which historically perform well in low-interest-rate environments.
Bitcoin's price is also positively correlated with global M2 money supply, which is currently trending upwards, indicating potential for increased liquidity in the market.
