Bitcoin and the US Dollar: Fundamental Attributes and Historical Correlation
Bitcoin, as a decentralized digital currency, has a strictly limited total supply of 21 million coins and is issued independently of any central authority. In contrast, the US dollar is a centralized fiat currency, printed by the Federal Reserve based on economic needs and regulated by inflation targets. Historically, Bitcoin's price and the DXY (US Dollar Index) have mostly shown an inverse relationship, meaning that when the dollar weakens, investors tend to shift funds towards higher-risk or inflation-hedging assets like Bitcoin.
2026 Correlation Shift and New Policy Directions
Entering 2026, the traditional negative correlation between Bitcoin and the US dollar has undergone a significant change. For example, in early March 2026, despite the DXY climbing to a high, Bitcoin's price rose instead of falling, breaking above $72,000, demonstrating a "decoupling" from historical patterns. JPMorgan Chase published an analysis in March 2026, confirming that the correlation between Bitcoin and the US dollar turned positive for the first time since 2014, marking a profound evolution in market dynamics.
The US government's attitude towards cryptocurrencies has also shifted from cautious regulation to actively promoting their development, aiming to establish the US as the "global crypto capital." The current Donald Trump administration has taken a series of concrete measures in this regard:
- Strategic Bitcoin Reserve: In December 2024, the Donald Trump administration proposed establishing a Strategic Bitcoin Reserve (SBR), planning to use the Treasury's Exchange Stabilization Fund (ESF) to purchase Bitcoin, treating it as a strategic asset.
- Policy Shift: In January 2025, the White House issued an executive order revoking the previous administration's policies, requiring the protection and promotion of privately operated cryptocurrency development, and explicitly prohibiting the establishment, issuance, or promotion of central bank digital currencies (CBDCs).
- Stablecoin Regulation: In July 2025, the US Congress passed the "Guidance and Establishment of National Innovation for US Stablecoins Act" (GENIUS Act), establishing a dual federal and state regulatory framework for stablecoins, requiring issuers to hold high-quality US dollar reserves.
- Security Tokenization Exemption: In September 2026, the US Securities and Exchange Commission (SEC) granted a five-year exemption to platforms using blockchain infrastructure to facilitate the trading of tokenized stocks and other securities, further promoting the application of digital assets in traditional finance.
Institutional Inflows and Market Outlook
The continuous influx of institutional capital is a significant driving force behind the development of the Bitcoin market. As of September 2026, Bitcoin spot ETFs have seen strong inflows, for example, recording a net inflow of $433 million on September 18, primarily led by large financial institutions such as Fidelity and BlackRock. JPMorgan Chase, PayPal, and other major financial institutions have also begun offering Bitcoin-related services or incorporating it into their investment portfolios.
Market analysts generally hold an optimistic view on the future of cryptocurrencies. Matt Hougan, Chief Investment Officer at Bitwise, believes that the "crypto winter" is over and the market is entering "crypto spring," expecting the strongest and longest-lasting bull market. Jurrien Timmer, Global Macro Director at Fidelity Investments, also stated that Bitcoin has emerged from winter, and a new four-year cycle bull market may have begun. Blue Macellari, Head of Digital Assets at T. Rowe Price, noted that Bitcoin is increasingly becoming part of the "debasement trade," with rising US government debt and high long-term yields providing support for Bitcoin's rise. As of September 24, 2026, Bitcoin's price was approximately $84,500, with a 24-hour trading volume of about $38.15 billion and a market capitalization of approximately $1.7 trillion.
US Dollar Stablecoins and Global Impact
US dollar-pegged stablecoins play a crucial role in the global cryptocurrency market. The two largest US dollar-pegged stablecoins, USDT and USDC, collectively account for nearly 90% of the total stablecoin market capitalization, with a combined market cap of approximately $292.49 billion. The issuers of these stablecoins collectively hold nearly $200 billion in US Treasury bonds, further solidifying the dollar's position in the digital currency era. The US government also aims to reinforce the dollar's status as the global reserve currency by promoting US dollar-backed stablecoins.
However, the International Monetary Fund (IMF) and the Bank for International Settlements (BIS) have repeatedly warned that US dollar-pegged stablecoins could pose risks to emerging economies, potentially accelerating capital flight during periods of stress. For investors, while Bitcoin is considered "digital gold" by some to hedge against inflation and economic turmoil, its price volatility is significant, and high returns are accompanied by high risks.
