JPMorgan: The weakening of the dollar has failed to boost Bitcoin, as the market still views it as a liquidity-sensitive risk asset

According to CoinDesk, despite the 10% decline in the US Dollar Index (DXY) over the past year, Bitcoin has not risen as it usually does when the dollar weakens; instead, it has dropped by 13%. JPMorgan Private Bank strategists explain that the current softness of the dollar is primarily driven by short-term capital flows and market sentiment, rather than changes in growth or monetary policy expectations. The dollar interest rate differential has actually favored the dollar since the beginning of the year, which has led to Bitcoin not performing as a typical dollar hedge.

Analysts believe that since the market does not view the current dollar decline as a lasting macro shift, Bitcoin is still seen as a liquidity-sensitive risk asset rather than a reliable store of value. In contrast, gold and emerging market assets have become more direct beneficiaries of dollar diversification.