Analysis: 2020 is the “worst year” for the dollar, benefiting Bitcoin and gold

Bitcoin (BTC) could find new record-breaking support in 2021 due to a weaker U.S. dollar.

As various sources have noted this week, the dollar is trading near three-year lows against a number of currencies and at five-year lows against the Swiss franc.

Analyst: Long-term trend 'clearly for a weaker dollar'

Weakness in the U.S. dollar tends to translate into strength for Bitcoin, and in 2020, the U.S. Dollar Currency Index (DXY) has become a reliable gauge of price direction.

BTC/USD (black) vs. Gold (blue) vs. DXY (orange) daily chart. Source: TradingView

The inverse correlation has been evident throughout 2020, and while Bitcoin’s relationship with the DXY has recently broken down, analysts remain convinced that new DXY lows are only good news for the cryptocurrency.

Renewed hopes for a global economic recovery, coupled with coronavirus stimulus packages, are the latest threat to weigh on the dollar. On Tuesday, the DXY fell to 91.1, its lowest level since April 2018.

“When you hear a report about a bipartisan stimulus deal after hopes were dashed, it’s just another reason to add risk and sell the dollar,” John Doyle, vice president of trading at Tempus, told Reuters.

US Dollar Currency Index (DXY) weekly chart Source: TradingView

Even Peter Schiff, a Bitcoin skeptic and gold fanatic as ever, agrees with the hodlers on the dollar’s ​​trajectory.

“The dollar is trading at its lowest level against the Swiss franc since January 2015,” he noted on Wednesday.

“This is a harbinger of things to come. The Swiss franc is leading the way, but other currencies will soon follow. 2021 could be the worst year ever for the dollar, at least until 2022.”

Grayscale gives unexpected sell signal for gold

Meanwhile, in gold, Schiff’s loyalty may soon be rewarded as the precious metal rebounds from its current dismal performance.

Barry Silbert, founder of cryptocurrency asset management giant Grayscale, confirmed that Grayscale will once again run the anti-gold ad "Drop Gold" on all major US TV networks after Bitcoin prices climbed to a record high. Grayscale Managing Director Michael Sonnenshein claimed that the ad is intended to encourage investors to exchange their gold for Bitcoin.

Macro investor Dan Tapiero responded to the news: “Barry is a brilliant businessman, a visionary Bitcoin trader and a great human being, but not a market trader or portfolio manager. He last posted this ad on May 19, just days before gold began its 30% rally. He may be selling at the low again.”

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