The USD index shows a 7% drop since the beginning of the year, dropping below 90 for the first time in 2 and a half years.
The dollar has been affected by global socio-economic uncertainty and rising inflation.
Bitcoin has risen nearly 350% this year as it is increasingly seen as a hedge against inflation and a store of value.
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The dollar index fell below 90 for the first time since April 2018. This is the lowest level for the global reserve currency in the past 2.5 years.
As the world, especially the United States, continues to suffer from widespread economic turbulence, general uncertainty and rising inflation, the value of the dollar has taken a significant hit.
Throughout this year, the dollar index fell by about 7%, from about 97 to its current level of 89.96. The dollar’s index has been on a downward trend since the beginning of the year.
While global fiat currencies are struggling under the current socio-economic conditions, cryptomoney like Ethereum Code is suffering the opposite effect.
Protecting against inflation
While the world’s fiduciary currencies are experiencing multi-year difficulties and troughs, the opposite is true for Bitcoin.
Since the beginning of 2020, the value of the BTC has increased by almost 350%, with its peak market value rising from $120.4 billion at the beginning of the year to $419.5 billion currently.
As the world struggles to find the best way forward economically, Bitcoin and its predetermined supply and production rate seems to bring some stability in the midst of uncertainty.
Bitcoin BTC ETF
Can Bitcoin replace the dollar as a store of value?
Traditionally, when a person seeks financial stability, they hold “safe” assets such as gold, real estate or a globally dominant currency.
With a global pandemic and a world economy at a standstill, partly supported by galloping inflation, many users and institutions are beginning to view Bitcoin as a safer cash asset than its alternatives.
There are many examples of institutions that are following this thought process. One of the best examples is MicroStrategy, a member of the S&P SmallCap 600 Index, which owns more than $700 million of Bitcoin and plans to purchase an additional $650 million.
Michael Saylor, MicroStrategy’s CEO, decided that it would be safer for the company to have a portion of its cash reserves in Bitcoin rather than USD, as he sees Bitcoin as a stronger hedge against inflation. So far, Saylor seems to be right, as digital assets continue their steady rise after recently surpassing their previous record.
Although daily price movements are not an indicator of long-term strength or ease of use, Bitcoin has continued to recover with a daily increase of almost 20%.