Plunging US Dollar Paves Way for Bitcoin to Challenge Gold Prices

The US dollar index fell to a three-year low, paving the way for Bitcoin to challenge gold prices.

Gold and USD prices fluctuate due to US tariff policy. Photo: Hai Nguyen

In the context of the war tax As the global economic crisis triggered by President Donald Trump continues to escalate, the world financial markets are witnessing a real shock: the US Dollar Index has just fallen below 100 - the lowest level in the past 3 years - rekindling the obsession of the shock in 1971 when the US ended the gold standard.

“What we’re experiencing is worse than when President Nixon took the U.S. off gold in 1971,” Marc Chandler, chief strategist at Bannockburn Global Forex in New York, told MarketWatch. “It’s a huge blow to confidence in America’s standing.”

This crisis of confidence is having far-reaching geopolitical consequences: a wave of “de-dollarization” is rising, and according to new analysis from Grayscale – one of the world’s largest digital asset managers – Bitcoin could become a real challenger to physical gold’s status as “digital gold” and its $22 trillion market.

The turmoil caused by the trade war and unstable US foreign policy has pushed central banks to consider diversifying their foreign exchange reserves, including investing in Bitcoin, according to Grayscale.

In a recently released report, Grayscale wrote: “Disruptions to the international financial and trade systems surrounding US dollar could push central banks to look to alternative assets for reserves, including Bitcoin.”

Bitcoin, with a limited supply of 21 million coins, has been called digital gold. While it has yet to demonstrate a clear “safe haven” role like gold, experts say it is just a matter of time and market maturity.

Grayscale cites historical data: during the stagflation period of the 1970s, gold prices increased by an average of 30% per year, much higher than inflation.

Similarly, with the current developments, investors are starting to look Bitcoin under the same lens.

“The market is reassessing the long-term appeal of the US dollar as a global reserve currency,” said George Saravelos, head of global FX research at Deutsche Bank. “A process of de-dollarization is underway.”

This shift is fueling speculation in scarce assets. “The decline in the US dollar is like a tidal wave lifting other assets, including cryptocurrencies,” said Alex Kuptsikevich, an expert at FxPro.

In Vietnam, representatives of the State Bank have repeatedly sent out the message: Bitcoin and other similar virtual currencies are not legal currencies and payment methods.

However, in Directive No. 05/CT-TTg, Prime Minister Pham Minh Chinh directed the Ministry of Finance and the State Bank to submit a proposal for a legal framework on digital currency in March.

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