Bitcoin Surges 10% to $100,000 as Dollar Weakness Looms

Bitcoin and cryptocurrency prices have surged this week as favorable conditions for risk assets converge. The bitcoin price has exceeded $100,000 for the first time since February, with traders taken aback by a rare bitcoin price prediction from David Sacks, the crypto czar of the White House.

As traders prepare for a potential $10 trillion shift on Wall Street, Federal Reserve chair Jerome Powell has been cautioned about a $2.5 trillion “avalanche” heading towards the U.S. dollar. This could potentially drive the bitcoin price towards gold’s $20 trillion market capitalization. Analysts Stephen Jen and Joana Freire have warned about the risks of a sudden sell-off in the dollar, pointing to recent spikes in the value of the Taiwan dollar and other Asian currencies as a possible precursor to a dollar sell-off.

The analysts predict that the overhang of liquid dollar holdings is too large, and if the dollar weakens, the Fed cuts interest rates, and China stages a cyclical rebound, there could be significant consequences. The Fed, which kept rates unchanged this week, is anticipated to start reducing interest rates this summer, with expectations for cuts totaling 75 basis points in 2025. U.S. trading partners may begin offloading their substantial dollar reserves and dollar-denominated assets accumulated during the Covid-era lockdowns, with at-risk dollars held by major Asian exporters estimated at $2.5 trillion.

Some analysts believe that a sell-off of the dollar and U.S. assets could flow into bitcoin, which has rebounded to near its all-time high of almost $110,000. Geoff Kendrick, head of crypto research at Standard Chartered Bank, noted that the dominant narrative for bitcoin has shifted again. Initially correlated with risk assets, bitcoin is now seen as a strategic asset reallocation tool and a beneficiary of various inflows, including spot exchange-traded funds (ETFs) and institutional investments.

Kendrick expressed that his second-quarter target of $120,000 for bitcoin might be too conservative. Other bullish analysts, such as Bill Miller IV, chief investment officer and chairman of Miller Value Partners, predict that bitcoin’s price will continue to rise until it surpasses gold’s $20 trillion market capitalization. Miller believes that bitcoin’s functional superiority in providing a check on fiat currency creation will drive its price to $1 million per bitcoin.