Bitcoin’s Double: A Dollar’s Fall and Money’s Flow

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The markets, vast and tangled, often hide their truths in the simplest signs. Right now, the U.S. Dollar Index (DXY) slips like a weary traveler, while the global M2 money supply swells like a river after a storm. These shifts, though quiet, have long been the winds that lift crypto’s sails—especially Bitcoin‘s, that stubborn, silver-backed vessel.

At roughly $118,000, Bitcoin stands at a crossroads, where fresh liquidity and a faltering dollar might converge into a gale. To the value investor, this is no mere speculation but a test of patience, a moment where history whispers of opportunity to those who listen.

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As the dollar sags, Bitcoin runs

Across Bitcoin’s 16-year journey, the dollar’s weakness has often been a siren song for those seeking refuge. The DXY, that measure of the greenback’s strength, recently plunged to a depth unseen in two decades, mirroring Bitcoin’s climb toward its peaks. In every great bull run—2013, 2017, 2021—the dollar’s decline preceded Bitcoin’s rise, a dance as old as the markets themselves.

The logic is plain: when the dollar falters, investors turn to assets that defy the grasp of governments. Gold, that ancient guardian, and Bitcoin, the digital heir, both find favor in such times. The dollar’s current frailty may not be fleeting. With rate cuts looming and Bitcoin’s supply shrinking post-halving, the balance of power shifts toward those who hold the scarce.

Yet correlation, for all its promise, is not a guarantee. Even so, a persistently weaker dollar tilts the scales. The small investor, the farmer, the teacher—those who toil without the luxury of leverage—find their hopes tethered to these tides.

The global money supply is expanding again

While the dollar stumbles, the world’s money supply surges, a tide that sweeps through economies like a forgotten prayer. The M2, that barometer of liquidity, reached $55.5 trillion in July, resuming a path paused in 2023. For Bitcoin, this is no coincidence. Its hard cap of 21 million coins makes it a beacon for those chasing scarcity.

Central banks, from India to China, have become architects of this flood, slashing rates and loosening reserves. Their actions echo across the globe, a synchronized rhythm that could swell the money supply further. To the value investor, this is both a promise and a warning: more money may chase fewer assets, but the path is fraught with uncertainty.

Historically, a 1% jump in M2 has often meant 65% gains for Bitcoin within a year or two. From $118,000, a doubling to $240,000 is not unthinkable, though no outcome is certain. The market, like the land, offers no guarantees—only the chance to plant seeds in fertile soil.

What investors should consider

The past is a map, not a compass. While the dollar weakens and money flows, inflation, rate hikes, or new trends could alter the course. Yet for the small investor, the current moment holds a peculiar dignity. In a world where power often bends to the few, Bitcoin’s rise is a quiet rebellion—a chance for the many to claim a share of the future.

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2025-08-02 16:58