Dollar’s Slide Fuels Gold’s Ascent While Bitcoin Stumbles: A Tale of Two Hedges

By John Ian Lau

As global markets grapple with a cocktail of geopolitical tensions, policy unpredictability, and fiscal concerns, the U.S. dollar has plunged to multi-year lows, propelling gold to unprecedented heights while leaving Bitcoin — often touted as the “digital gold” — in the dust. The divergence highlights shifting investor appetites in an era of uncertainty, with traditional safe havens reclaiming the spotlight from riskier crypto assets.

The U.S. Dollar Index (DXY), which tracks the greenback against a basket of major currencies, tumbled to around 96 this week, marking its lowest level in four years and a roughly 11% decline over the past 12 months. This weakness stems from a confluence of factors: President Donald Trump’s aggressive tariff threats, including escalations against NATO allies over issues like Greenland, have rattled investors and amplified fears of trade wars. Speculation about the Federal Reserve’s independence under a potential new chair post-Jerome Powell’s term ending in May, combined with persistent U.S. budget deficits and a “Sell America” trade sentiment, has further eroded confidence in the dollar. Trump’s public dismissal of the dollar’s slide as “not concerning” only fueled the sell-off, with the index dropping nearly 1.3% in a single day following his remarks.

Amid this turmoil, gold has emerged as the quintessential hedge, surging past $5,500 per ounce for the first time — a blistering 30% gain year-to-date and its biggest monthly rally in decades. The precious metal’s appeal lies in its time-tested role as a store of value during currency debasement and geopolitical strife. Central banks have been aggressive buyers, while safe-haven demand has intensified amid U.S. policy erraticism and global risks, including tensions with China and Japan. Chris Beauchamp, chief market analyst at IG, noted that “each time precious metals seem at risk of running out of bullish momentum, something comes along to rescue it,” pointing to Trump’s dollar comments as a fresh catalyst. Analysts at Deutsche Bank have even projected gold could reach $6,000 this year, driven by sustained dollar weakness and structural shifts.

In stark contrast, Bitcoin has faltered, slumping from highs near $96,000 in early January to around $82,000-$88,000, a 25% drop since October and a 7% decline this month alone. Once heralded as a modern alternative to gold for hedging against inflation and fiat erosion, the cryptocurrency has instead behaved like a “high-beta risk asset,” correlating more with speculative stocks than with dollar hedges. Investors have yanked over $1.3 billion from Bitcoin-linked funds amid risk aversion, while a rebound in the dollar briefly added pressure before the greenback resumed its slide. Citigroup and Tagus Capital analysts have observed that Bitcoin’s inflation-hedging properties are “episodic at best,” influenced more by liquidity and tech flows than enduring macro trends.

Market watchers have been vocal about this disconnect. Mike Novogratz, CEO of Galaxy Digital, tweeted that “the gold price is telling us we are losing reserve currency status at an accelerating rate,” while expressing disappointment in Bitcoin’s performance, predicting it needs to break $100,000-$103,000 to resume its uptrend. Macro analyst Luke Gromen, in an interview with podcaster Natalie Brunell, described the post-1971 dollar system as “cracking faster than most people realize,” with Bitcoin trading like a “high-beta tech stock” amid bearish signals in assets priced against gold. Economist Peter Schiff has warned that gold’s rally signals a major dollar crisis and potential economic collapse, echoing calls from Dr. Nomi Prins for gold to hit $6,000 as central banks diversify away from the dollar.

Jesse Colombo, publisher of The Bubble Bubble Report, sees the dollar’s breakdown from a two-decade channel as a harbinger of a secular bear market, forecasting gold at $6,000 or higher. Even crypto proponent Michaël van de Poppe noted Bitcoin’s resilience amid uncertainty but highlighted its potential for a triple bottom against gold’s strength. Former Trump adviser Judy Shelton has floated bolder ideas, advocating for U.S. Treasury gold-backed bonds valued at over $1.2 trillion based on current market prices, potentially launching on July 4, 2026 — America’s 250th anniversary — to restore trust and compete with China’s monetary ambitions.

As trillions in liquidity loom and rates potentially ease, the stage is set for more volatility. But with gold shining and Bitcoin dimmed, one question lingers: Will the original hedge maintain its dominance, or can digital assets finally live up to their promise in a world rethinking money itself?