🤔 Whistling DXY

There is a fundamental problem with Bitcoin that nobody talks about: BTC is almost always priced in US dollars.

And depending on where you land on the true-believer scale, US dollars are either destined for hyperinflation and headed to zero — or at the very least, doomed to be usurped by the yuan as the top global reserve currency.

Bullish.

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You might know that the US dollar has been pummeled this year. 

The DXY index — which prices the greenback against a basket of currencies — is down 12% since mid-January, practically erasing all of its gains over the past five years.

Granted, DXY has its problems. It’s heavily skewed toward the dollar’s exchange rate in Europe, with more than half of its weight assigned to the euro, as well as 20% or so spread unevenly across the British pound, Swedish krona and Swiss franc. 

The Japanese yen is the only featured currency from Asia, with about 14%. The renminbi is excluded altogether, and the US dollar is down only about 2.5% against the yuan since mid-January.

As you can see, this quickly gets messy. Bitcoin is up almost 12% in the past six months, while the DXY is down by almost the same percentage. Does that mean bitcoin is about even?

Well, whether it’s over five years, three or one, BTC/USD is vastly outperforming major assets and benchmarks. 

Bitcoin (priced in US dollars) is beating crude oil, gold, the S&P 500 and the Nasdaq 100. 

Let’s instead see the price of bitcoin, denominated in each of those majors. It’s similar to how we’d measure the price of ETH in BTC terms with the ETH/BTC ratio.

Bitcoin’s ratio with the S&P 500, Nasdaq 100 and crude oil topped out in late May, and we’re still just shy of all three.

That’s in line with bitcoin’s current standing against the US dollar (in raw dollar terms, not DXY), only 2% short of a new price record.

The gold/bitcoin ratio is however almost 20% below its all-time high from a week before Christmas 2024.

But what would this newsletter be without something to celebrate?

When bitcoin hit $110,500 earlier this morning, on Coinbase, that was actually an all-time high against DXY — 1139.58 — around 2% higher than the previous peak in late May. 

A minor victory, considering the DXY’s flaws. But a win is a win.

— David

• BTC/USD was back above $110,350 as of 10 am ET — only $1,300 short of an all-time high.

• The IMF has reportedly declined a bid from Pakistan to supply 2,000 watts of subsidized electricity to bitcoin miners.

• Bangkok has you now: The consortium of backers behind Metaplanet is making headway in Thailand.