Bitcoin and gold are booming, but beware of that falling dollar

Just as Bitcoin, silver, and gold prices are hitting record highs, the US dollar continues to fall. Although it gained ground against the euro on Monday (due to the French government’s collapse), the greenback is losing ground against almost all other major fiat currencies. Since New Year’s, the US dollar has had its worst year since 1973 (the year of the oil crisis for anyone over 50).

What does this mean for Bitcoin and crypto? And how can you protect yourself against a downturn?

Crash

The S&P 500 has risen by some 40% in the past six months, many companies are trading at multiples of their annual profits (something we last saw just before the dotcom crisis in 2001) while gold and Bitcoin are hitting record highs. Meanwhile, the US dollar is experiencing its worst year since 1973. The question to ask is: are the markets strong, or is it simply an effect of the dollar crashing?

Bitcoin soared this weekend to a price of $125,000, and many Wall Street analysts are already predicting a price of $150,000 by the end of the year.

A new analysis suggests that “safe havens” like gold, silver (and sometimes Bitcoin) are hitting record highs precisely because the markets are too high and because investors fear a stock market crash is a possibility (also because of the current geopolitical risks which are elevated).

Flight from fiat

A Wall Street Journal analyst summarized the current situation as follows: “The safe havens are getting stronger because fiat currencies, especially the dollar, are getting weaker. This isn’t really a bull market, it’s simply a flight from fiat.”