Is US Dollar Getting Weaker? Looking at the Potential of Risky Assets

The recent surge in Bitcoin’s price has led many to question whether the US dollar is losing its strength. As Bitcoin soared past $123,000 this July, investors and analysts are looking at what this could mean for global currencies and risky assets. 

Euro Pacific Capital’s Peter Schiff argues that it is not Bitcoin’s strength we should be focusing on, but rather the dollar’s weakness driving these records. This article explores whether the US dollar is weakening and how this shift affects risky assets like Bitcoin.

Bitcoin’s Record Highs and What They Reveal

Bitcoin has reached unprecedented heights, with its price soaring to $123,000, driven by robust demand from Wall Street institutions and everyday crypto buyers. Many view this as a testament to Bitcoin’s potential as an alternative store of value. 

The realised market capitalisation of Bitcoin touched a staggering $1 trillion this month, reflecting significant gains for both long-term holders and casual investors.

However, not everyone sees these highs as a pure reflection of Bitcoin’s underlying strength. Peter Schiff, a well-known critic of cryptocurrencies and advocate for gold investments, has voiced scepticism over what these figures actually imply. 

According to him, Bitcoin’s record highs are not necessarily a result of its intrinsic growth but rather a sign of the US dollar’s declining value against other global currencies.

He argues that Bitcoin is only achieving record prices when measured in dollars. In euros or Swiss francs, these records are far less impressive, indicating that the dollar’s weakening purchasing power may be fuelling these headlines. 

While many investors are celebrating their returns, it is crucial to question whether these gains would hold the same value if the dollar continues to depreciate on the world stage.

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Peter Schiff’s View: Dollar Weakness, Not Bitcoin Strength

Peter Schiff has long been sceptical of Bitcoin’s meteoric rise. He describes the current market enthusiasm as driven by speculation rather than any fundamental shift in value. Schiff believes that what people are witnessing is not the strength of Bitcoin itself but rather the weakening position of the US dollar.

He highlights that the currency’s devaluation means that it takes more dollars to buy the same amount of Bitcoin, which artificially inflates its price in dollar terms. This theory is reinforced by the fact that Bitcoin is not making similar record highs in other major currencies like the euro or Swiss franc.

Moreover, Schiff warns investors about the risks of what he calls a “Ponzi scheme built on a house of cards.” He believes that excessive optimism in the crypto space could lead to losses if the US dollar regains strength or if market conditions reverse. 

As governments consider regulations such as the GENIUS Act for stablecoins, it is clear that the crypto landscape remains in flux, adding another layer of uncertainty for investors betting heavily on risky assets.

Read Also: Why the GENIUS Act Matters for Crypto and the U.S. Economy

The Risks of Investing in Unclear Crypto Assets

While Bitcoin remains the largest cryptocurrency by market capitalisation, it is essential to remember that investing in crypto assets carries inherent risks. This becomes even more significant when dealing with smaller tokens that lack transparency. 

Some of these coins do not even have accessible whitepapers on their official websites, making it difficult for investors to assess their purpose, technology, and long-term viability.

The current environment of dollar weakness can make risky assets like cryptocurrencies appear more attractive as alternative stores of value. However, the volatility associated with these investments, combined with the possibility of regulatory crackdowns, creates an unpredictable landscape. 

Investors should exercise caution, conduct thorough research, and avoid placing substantial portions of their portfolios into coins with opaque structures or unclear roadmaps.

Bitcoin’s recent rally may reflect a weakening dollar, but it is not necessarily a reliable indicator of financial security for the future. The lack of transparency in many crypto projects only heightens these concerns. It is important to question not only the price trends but also the underlying fundamentals of any asset before deciding to invest.

Read Also: Is the Genius Act Cancelled?

Conclusion

Bitcoin’s impressive rise to record highs this July has led to speculation about the weakening US dollar. While many view these price increases as proof of crypto’s strength, others like Peter Schiff see them as signs of dollar devaluation. 

Investing in cryptocurrencies can seem attractive in this environment, but it is crucial to approach such assets with caution, especially when transparency is lacking. Conducting detailed research and understanding both the risks and market context can protect you from unexpected losses in these highly volatile markets.

Read Also: Crypto Bills Passed Today: Clarity Act, Genius Act, and CBDC Ban Explained

FAQ

Is the US dollar actually getting weaker?

Some analysts argue that the dollar’s purchasing power is declining, as reflected in Bitcoin’s rising price in dollar terms.

Does Bitcoin’s rise mean it is stronger than other currencies?

Not necessarily. Its price is mainly rising in dollars, while in other currencies the increases are less dramatic.

Why does Peter Schiff criticise Bitcoin’s record highs?

He believes the price surge is due to dollar weakness rather than Bitcoin’s strength, and views it as speculative.

Is investing in crypto assets risky now?

Yes, crypto investments remain risky, particularly with projects that lack clear information or accessible whitepapers.

Should I invest in coins without whitepapers?

It is not advisable to invest in projects without accessible whitepapers, as this limits your understanding of the asset.