Bitcoin Plunges, Gold Hits New High, Dollar Collapse Unfolding

Original Title: 'It is Now Happening'—Urgent U.S. Dollar 'Collapse' Warning Issued As Markets Brace For Gold And Bitcoin Price Shocks
Original Author: Billy Bambrough, Forbes
Translation: Peggy, BlockBeats

Editor's Note: With the resurgence of Trump's tariff threats, the weakening of the U.S. dollar, gold hitting a historical high, and Bitcoin falling below $90,000, almost erasing its year-to-date gains, market concerns about stagflation have intensified. Funds are once again flowing into "store of value" assets. This article examines why gold and Bitcoin have taken divergent paths under this macro shock.

The following is the original text:

In recent months, there has been a clear divergence in the trends of Bitcoin and gold: gold has continued to soar, while Bitcoin's price has experienced a sharp decline. At the same time, the trade war sparked by U.S. President Donald Trump has escalated once again, posing potential pressure on the U.S. dollar.

Bitcoin's price saw a sudden drop overnight, falling from nearly $96,000 to just above $90,000 in a matter of minutes. Meanwhile, following Trump's threats to increase tariffs on eight NATO allies and his request for Denmark to reach an agreement on the Greenland issue, the price of gold hit a historic high.

Now, as the CEO of Bank of America issues a grave "trillion-dollar" cryptocurrency warning and traders begin to prepare for this week's inflation data, which may exceed previous expectations, concerns about "unprecedented stagflation" have been further triggered.

Billionaire investor and hedge fund giant Bridgewater Associates founder Ray Dalio warned that the recent weakening of the U.S. dollar indicates that the "collapse of the U.S. dollar as the world's reserve currency" that he has long predicted is "happening now."

Dalio wrote on X, "The existing fiat currency order, domestic political order, and international geopolitical order are all unraveling, so we are on the edge of war."

Last year, the U.S. dollar, as measured by the U.S. Dollar Index, fell by nearly 10%. It is widely expected that the dollar will weaken further this year, while gold, silver, and Bitcoin prices may experience significant increases.

Ray Dalio wrote: "All this is happening because a big cycle driven by five key forces is at play." The five key forces he refers to, from his work "Principles for Dealing with the Changing World Order," are: economic cycles, domestic unrest, great power conflicts, natural disasters, and technological developments.

Dalio also referenced a video showing that the era dominated by the U.S. and the U.S. dollar is on the decline, being replaced by a new era dominated by China.

In this 2023 video, Dalio states: "When a new rising power is strong enough to compete with the dominant power, and the latter is experiencing internal disorder and intensified external conflicts, the most typical result is often the outbreak of war."

He further says: "These internal and external wars give birth to new winners and losers. Subsequently, the winners come together to establish a new world order, and thus a new cycle begins anew."

Meanwhile, as the U.S. dollar faces its largest single-day drop in over a month, Bitcoin falls below $90,000, nearly erasing all gains since 2026; while gold once again hits a new all-time high. FxPro Chief Market Analyst Alex Kuptsikevich commented in an email, stating: "Bitcoin is facing a double blow from tariffs."

He points out: "Trump's desire to make the U.S. the global capital of crypto has made crypto assets to some extent 'American assets.' Therefore, when the 'sell America' trading logic reemerges, the bottom support for Bitcoin longs is quickly pulled away."

Jerome Powell, Chair of the Federal Reserve, faced pressure last year from the so-called 'debasement trade,' which drove strength in gold and Bitcoin prices. (Image source: Getty Images)

Barclays and Morgan Stanley economists have raised their forecast for the U.S. December Personal Consumption Expenditures (PCE) price index to 2.8% or 2.9%. Meanwhile, Andy Schneider of BNP Paribas wrote in a report seen by Reuters that this data will be "significantly" higher than the 2.7% Consumer Price Index (CPI) released last week.

The latest PCE data will be released on Thursday. PCE is the Fed's preferred inflation gauge, excluding volatile food and energy prices. This data may reignite market concerns about so-called "stagflation," where weak economic growth coexists with price surges.

Gold investor Peter Schiff posted on X, stating, "The upcoming collapse of the US dollar will drive consumer prices higher." He has always been bearish on the dollar and critical of Bitcoin. "Get ready for unprecedented stagflation."

Ahead of the latest inflation data release, the dollar weakened due to the return of last year's "currency debasement trade," where investors bet on a weaker dollar while flowing into scarce assets like Bitcoin, gold, silver, copper, and stocks.

This year's Bitcoin rally has been impacted by the latest round of Trump's trade war. This conflict has not only suppressed the dollar but also boosted gold. Source: Forbes Digital Assets

Trade Nation's Chief Market Analyst David Morrison commented via email, saying, "President Trump's new tariff threat to trade partners and NATO allies over the Greenland issue triggered a dollar sell-off in the markets." He added, "The US Dollar Index plummeted rapidly back below 99.00. Last weekend, the index hit a six-week high."

With the dollar weakening, both gold and silver prices hit all-time highs. David Wilson, Head of Commodity Strategy at BNP Paribas, told Bloomberg that not long ago the market thought reaching $5,000 per ounce for gold was a "big target," but that level is now within reach.

Meanwhile, traders are betting that Bitcoin's weak trend will continue as geopolitical uncertainties suppress risk appetite.

Nic Puckrin, Co-Founder of Coin Bureau and digital asset analyst, commented via email, "From the current standpoint, unless there's buying interest, we are likely to see further declines, with strong support around $88,000. Geopolitical uncertainty and concerns around Greenland are likely to deteriorate in the short term before gradually improving."

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