The US dollar has experienced significant depreciation this year, with the DXY index — which measures the greenback against a basket of major currencies — declining by approximately 12% since mid-January. This drop effectively wipes out nearly all the gains accumulated over the past five years.
However, it's important to note that the DXY index has its limitations. It is heavily weighted toward European currencies, with the euro accounting for more than half of its composition. An additional 20% is unevenly distributed among the British pound, Swedish krona, and Swiss franc. The Japanese yen is the only Asian currency included, representing about 14% of the index. Notably, the Chinese renminbi is entirely excluded.
Bitcoin’s Performance in a Volatile Currency Landscape
When analyzing Bitcoin’s performance relative to the US dollar, the relationship becomes complex. Over the past six months, Bitcoin has appreciated by almost 12%, while the DXY has fallen by a similar margin. Does this mean they are effectively even? Not quite.
Across multiple timeframes — whether one, three, or five years — Bitcoin priced in US dollars has significantly outperformed major traditional assets and market benchmarks. This includes commodities like crude oil and gold, as well as equity indices such as the S&P 500 and the Nasdaq 100.
It is worth mentioning that, over three-year and five-year horizons, Bitcoin has trailed behind the performance of Nvidia stock. Still, its overall strength against fiat and established asset classes remains notable.
Measuring Bitcoin Against Major Benchmarks
Another way to gauge Bitcoin’s strength is to denominate it in terms of other major assets — similar to how traders evaluate the ETH/BTC ratio. When compared to the S&P 500, Nasdaq 100, and crude oil, Bitcoin’s ratio peaked in late May and remains slightly below those levels today.
This aligns with Bitcoin’s current standing against the US dollar itself, sitting only about 2% below its all-time high in raw dollar terms.
Meanwhile, the gold/bitcoin ratio tells a different story. It currently trades nearly 20% below its record high, which was set just a week before Christmas in 2024.
A New All-Time High Against the DXY
Despite the DXY’s structural flaws, Bitcoin recently achieved a meaningful milestone. When it reached $110,500 on Coinbase, it simultaneously set a new all-time high against the DXY index, surpassing the previous peak from late May by around 2%.
This may be a minor victory in the grand scheme of global finance, but it underscores Bitcoin’s resilience and growing influence as a global asset. In an era of currency volatility and macroeconomic uncertainty, Bitcoin continues to prove its merit.
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Frequently Asked Questions
What is the DXY index?
The US Dollar Index (DXY) measures the value of the US dollar relative to a basket of foreign currencies. It is heavily weighted toward the euro and other major European currencies, which some analysts believe limits its accuracy as a true measure of global dollar strength.
How does Bitcoin perform compared to traditional assets?
Over multiple time horizons, Bitcoin has outperformed traditional assets like gold, crude oil, and major stock indices such as the S&P 500 and Nasdaq 100 when priced in US dollars. Its performance highlights its potential as a high-growth asset class.
Why is measuring Bitcoin against the DXY important?
Comparing Bitcoin to the DXY offers insight into how the cryptocurrency performs relative to the broader strength or weakness of the US dollar. This can help investors understand Bitcoin’s role as a potential hedge against dollar depreciation.
What was Bitcoin’s all-time high against the DXY?
Bitcoin reached a new high against the DXY index when it hit $110,500, surpassing the previous record set in late May by approximately 2%. This illustrates Bitcoin’s strength even when accounting for fluctuations in the dollar’s value.
Does the DXY include the Chinese renminbi?
No, the DXY does not include the Chinese renminbi. The index consists primarily of the euro, Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc.
How can I monitor Bitcoin’s performance in real time?
There are various platforms and financial tools that allow users to track the price of Bitcoin against the US dollar and other global currencies in live market conditions. Staying informed helps in making timely and data-driven decisions.