A weak dollar is normally good news for Bitcoin, how about this time?

Bitcoin trades comfortably above $100,000 even though we’re almost at the end of August (traditionally a very bad month) and the weak dollar is also stimulating the largest digital currency. But the fact that the dollar is weakening because Trump is firing a Fed governor is actually bad news. Because in that way, he’s making institutional investors wary about the US’s separation of powers, and that always ends badly.

Bitcoin and the dollar

The DXY, or dollar index, had an incredibly rough first half of this year, losing around 10%. This actually boosted the price of Bitcoin, since it’s denominated in US dollars (oil also appears cheaper than it is because those barrels are also traded in US dollars). The euro, gold, and Bitcoin were the winners of the first half of the year.

The dollar is still performing poorly in the second half of the year (we’re already at the end of the eighth month). This is good for Bitcoin, but also a risk, because at some point, a counter-reaction could occur and the dollar could retreat, getting stronger again. If that happens, Bitcoin would automatically lose support and could easily fall below $100,000. Hypothetical, of course, but it seems logical that the dollar can’t keep falling like this forever.

Why

The dollar weakened again this week after President Donald Trump took the unprecedented step of firing Federal Reserve Governor Lisa Cook (this comes about a month after he fired Erika McEntarfer, chair of the US jobs data agency, for disagreeing with her poor job report). This, of course, rekindles concerns about the central bank’s independence, which is not good.

The separation of powers remains crucial for the proper functioning of the world’s largest economy. Investors might decide to change T-bills from the US for investments in Europe or even China instead of the wobbliness of the US if Trump continues to fire people he doesn’t like.