JPMorgan: Bitcoin Trades as Liquidity-Sensitive Risk Asset Despite 10% U.S. Dollar Decline

Bitcoin has fallen 13% over the past year even as the U.S. Dollar Index (DXY) declined 10% in the same period, failing to mirror its historical pattern of rising against dollar weakness, JPMorgan Private Bank strategists said on Jan. 29. The strategists said the latest dollar softness is driven by short-term capital flows and market sentiment rather than shifts in growth prospects or monetary policy expectations, while interest rate differentials since the start of the year have actually supported the dollar, limiting Bitcoin's role as a typical dollar hedge. JPMorgan analysts added that, because markets do not view the current dollar decline as a lasting macro change, Bitcoin continues to be regarded as a liquidity-sensitive risk asset instead of a dependable store of value, whereas gold and emerging market assets have been the more direct beneficiaries of dollar diversification.