Why Cryptocurrencies Are Rising While Dow Jones and Dollar Plunge
Cryptocurrencies have rallied this week despite a decline in US stock indexes such as the Dow Jones, S&P 500 and Russell 2000, along with a decline in the US dollar index – which recorded its worst week since April following controversial statements from former President Donald Trump about “reciprocal” tariffs.
Bitcoin and altcoins surge
Bitcoin hit a new all-time high of $111,900, while the market capitalization of altcoins – excluding Bitcoin – climbed to $1.29 trillion, marking its highest level since February this year.
In contrast, the Dow Jones – which tracks the performance of 30 leading blue-chip companies – fell to 41,340 points, representing a 3.45% decline from its peak for the month. Other major indices such as the S&P 500 and Nasdaq also saw a drop of more than 1.2%, wiping out billions of dollars in market capitalization.
The US dollar index (DXY) – which reflects the strength of the USD against major currencies – fell to $99.10. This is a sign of a technical correction after the DXY fell more than 10% from its recent peak.
Why are cryptocurrencies outperforming?
Digital assets such as Bitcoin are increasingly asserting their role as safe havens amid growing economic and geopolitical uncertainty. A recent report from BlackRock – the world’s largest asset manager – highlighted that Bitcoin, like gold, could serve as a hedge against the risks of escalating US debt.
BTC prices reacted positively after Moody’s downgraded the US credit rating from AAA, citing the growing burden of public debt. Both S&P Global and Fitch have downgraded the US credit rating.
Investors were also concerned when the US House of Representatives passed a new Trump bill – often called the “Big, Beautiful Bill” – that would cut taxes by more than $4 trillion. The plan is expected to increase the national debt by $4 to $5 trillion over 10 years, while the current figure is close to $37 trillion.
The US stock market continued to be under pressure when Trump announced that he would impose a 50% tariff on goods from Europe from June 1. The European Union (EU) has warned of retaliation, threatening to disrupt the trade flow worth more than $1.7 trillion a year between the two regions.
Bitcoin remains strong
Despite the macroeconomic turmoil, Bitcoin’s on-chain indicators remain positive. Data shows that demand from financial institutions continues to increase, while circulating supply is gradually decreasing due to the halving effect and long-term hoarding.
Bitcoin – dubbed “digital gold” – is demonstrating its resilience and potential to become a long-term store of value in a volatile global financial environment.
