The US economy is suffering losses due to the new tax policy proposed by Donald Trump. This policy weakens the strength of the USD and causes instability in the financial market. However, Bitcoin is emerging as a safe option for investors.
The USD DXY index has dropped below 100 for the first time in three years, falling to 99.01 before rising to 99.45. Since Trump returned to the White House, the USD index has declined by over 7%, with a 2% drop just in the past week due to the trade war with China.
Despite the increase in US 10-year government bond yields, the USD is declining. This indicates that investors are worried and lack clear predictions about future economic policies.
In contrast, Bitcoin is on the rise. Its value has increased from $74,500 to $82,500 as investors turn to it as a "digital gold", a safe haven during unstable traditional financial periods.
Other major currencies like the euro, Swiss franc, British pound, and Australian and New Zealand dollars are also strengthening against the USD. The euro could reach 1.15 against the USD if no major developments occur. This proves the declining confidence in the USD on an international scale.
People are increasingly concerned about the US government's budget plan. The new budget plan has increased risks for US assets such as stocks and bonds.
The March CPI index was lower than expected at 0.1% instead of 0.3%, but this did not prevent the weakening of the USD. People believe that previous inflation indicators are no longer sufficient to soothe the market.
According to Bloomberg, Trump has signaled that he might remove the Federal Reserve Chairman if interest rates are not lowered soon, increasing political risks in an unstable environment.
As long as trade and interest rate issues remain unclear, the USD will continue to weaken. Bitcoin will have an opportunity to flourish when more people need alternatives to mainstream finance.
