The US dollar is weakening, but Bitcoin remains "stagnant." What is the reason behind this?

2026-02-02 19:45:01

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The US dollar has weakened, but it has not sparked the typical rally in Bitcoin as in previous times. This “unusual trend” has attracted market attention. J.P. Morgan Private Bank believes that the key is not Bitcoin itself, but rather that this wave of dollar decline is fundamentally different from past episodes.

The US Dollar Index (DXY), which measures the dollar against major currencies, has fallen about 10% over the past year; however, Bitcoin, traditionally seen as a “beneficiary of a weak dollar,” has actually declined by 13% during the same period.

Yuxuan Tang, Head of Asia Macro Strategy at J.P. Morgan Private Bank, pointed out that the recent dollar depreciation is driven by short-term capital flows and market sentiment, rather than changes in market expectations for the US economy or monetary policy.

He mentioned, “In fact, since the beginning of the year, interest rate differentials have continued to develop in favor of the dollar. The current dollar sell-off is similar to April last year, mainly driven by capital flows and market sentiment.”

Against this backdrop, J.P. Morgan believes that the dollar’s weakness may ultimately be a “phase,” and as the US economy gradually regains momentum this year, the dollar could stabilize again.

It is precisely because of this that Bitcoin has not exhibited the typical characteristics of a “safe haven asset” for the dollar this time. In contrast, gold has continued to strengthen during the dollar’s decline, while Bitcoin prices have remained volatile within a range, indicating that the cryptocurrency market does not believe that the dollar’s fall will lead to a long-term overall economic shift.

From market performance, Bitcoin currently appears to be more like a risk asset that is highly sensitive to liquidity rather than a store of value. Until there is a clear shift in monetary policy expectations, a mere weakening of the dollar is not enough to attract significant new capital inflows into the cryptocurrency market.

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