Published: November 17, 2023 – grab your caffeine, this one’s spicy.
Whoa, the Greenback Just Tripped
Everybody on CT (Crypto Twitter, for the uninitiated) is high-fiving because the U.S. Dollar Index (DXY) just slipped from 106 to 103.2 in barely three weeks. The mainstream take is simple: weaker buck = stronger Bitcoin. I get the surface-level math—dollar down means risk assets in other denominations look juicier. But hang on… am I the only one with déjà vu?
Last time traders chanted “DXY go down, BTC go up” was mid-2020. Sure, we ripped from $10k to $64k. But we also ignored every flashing macro warning—then 2022 showed up with a steel chair. I’m not entirely sure we’ve learned the lesson.
Here’s What Actually Happened
The dollar’s weakness isn’t some mysterious crypto fairy dust. Traders are betting the Fed’s November CPI print (3.2% YoY) and soft retail sales will force Powell to pivot sooner than the “higher for longer” script. Eurozone GDP is a snoozefest, China’s deflation risk is real, so money’s rotating into non-USD pairs, gold, and yes—orange coin.
Bitcoin reacted like a coiled spring: $34.4k on October 24 → $37.9k today. Funding rates on Binance hit 0.05% (annualized ~29%)—not insane, but frothy enough that I’m checking the wet-paint sign twice.
But Does a Softer Dollar Automatically Equal a Parabolic BTC?
Let’s zoom out. The DXY is still higher than its 2021 average (≈92). Meanwhile, global M2 is shrinking for the first time in 30 years. Liquidity is the real oxygen for crypto rallies, and we’re basically chain-smoking the last few molecules. Unless the Fed restarts QE or slashes rates, I’m skeptical this dollar dip alone can fuel a 2017-style blow-off.
“Liquidity drives everything. The dollar is just the scoreboard.” —Arthur Hayes, Bankless pod, Oct 2023
Hayes is rarely dull, but he’s right. If the dollar falls because the Fed is adding liquidity, that’s tailwind. If it falls because the rest of the world looks even uglier, that’s just relative ugliness. Bitcoin benefits, sure, yet it’s more sympathy bid than rocket engine.
Let Me Play Devil’s Advocate
1. ETF Front-Running: BlackRock’s spot ETF decision window starts Jan 10. Flows could dwarf Grayscale. If you believe TradFi whales care about DXY levels, I’ve got a bridge-token to sell you.
2. Halving Hype: We’re 150 days out. On-chain nerds tout $125k supply-demand models. Cool story, but halving cycles don’t exist in a vacuum—they ride macro waves.
3. Global South Demand: Argentina’s peso just did a cannonball, Nigeria’s naira’s sinking, and I’m hearing chatter on Paxful volumes spiking again. That’s real adoption, but those users buy dips, not tops.
So yeah, bullish ingredients are there—but we’ve still gotta preheat the oven with liquidity.
Remember March 2020? Yeah, That Sting Still Hurts
Back then the dollar ripped to 102, BTC nuked to $3.8k, and Twitter declared Bitcoin dead (again). Fast-forward eight months and Bitcoin printed new ATHs while DXY bled out. The kicker? Fed balance sheet shot from $4 trn to $7 trn. Easy money > weak dollar.
Today’s balance sheet is actually shrinking—QT at roughly $95 bn/month. Unless Powell U-turns, we’re partying with the bartender already removing bottles from the shelf.
Okay, So What Am I Doing With My Stack?
I’m layering bids from $34.8k down to $32k—just in case ETF optimism over-extends. I’ve also sold covered calls at $42k expiring Dec 29 via Deribit. If the Santa rally happens, I’ll happily roll them. If we chop, premium pays for holiday coffee.
For the degen corner: I’m eyeing SATS-PERP on AEVO. Funding is cheaper, open interest lighter. If dollar softness turns into a USD liquidity gusher, SATS will probably front-run BTC.
Why This Matters for Your Portfolio
If you’re new, the reflex is: “Dollar down, buy anything with a crypto ticker.” But consider:
- Volatility clustering: Dollar moves often precede FX volatility spills. Flash crashes love illiquid crypto markets.
- Correlation decay: In Q3, BTC’s 30-day correlation with DXY was –0.32. It’s now –0.12. Relationships change.
- Divergence risk: Altcoins haven’t followed Bitcoin. ETH/BTC is at 0.053—lowest since mid-2022. Dollar dynamics alone can’t explain that spread.
Basically, if you’re counting on “parabolic” to bail out underwater bags, you might be sprinting on a moving walkway that’s slowing down.
Random But Relevant: Taylor Swift, NFL, and the ‘Unit Bias’ Psychology
Quick tangent—Unit bias (people prefer whole units over decimals) is why folks buy Shiba instead of BTC sats. With Taylor Swift rumored to headline the Super Bowl halftime, imagine a crypto exchange ad flashing “Stack Sats, Not Dollars.” Would retail care about DXY? Probably not. Narrative trumps macro for normies, at least until their paycheck buys half the groceries.
My point: narratives flip overnight. Today, dollar weakness is the headline. Tomorrow, it could be ETF denial or Gaza escalation. Don’t marry one catalyst.
Bottom Line (Because I Know You’re Skimming)
The accelerating dollar weakness could be the starter pistol for Bitcoin’s next leg, but without fresh liquidity, we’re basically flooring the gas in neutral. I’m cautiously long, hedged, and emotionally detached.
And hey, if I’m wrong and we print $50k by Christmas, I’ll eat a slice of humble pie on Spaces—recorded for posterity. Until then, keep your stops tight and your memes tighter.
None of this is financial advice. Seriously, I still haven’t forgiven myself for holding Luna in 2021.
