US dollar index falls to a one-month low as Bitcoin hits $40K

Bitcoin surged above $40,000 for the second time this week on Thursday as the US dollar index speed up its fall. 
Image by Gerd Altmann from Pixabay

Key Takeaways

  • US Dollar Index continues to fall as BTC crosses $40,000 again
  • Unlcear messages from Federal Reserve Meeting fail to stabalise the Dollar
  • Russia dumps the use of USD in international arms trade

Yerevan (CoinChapter.com) – Bitcoin surged above $40,000 for the second time this week on Thursday as the US dollar index speed up its fall. 

Putting the 92.00 support to the test, the US Dollar Index continued its downward trend, touching new lows. The markets opened with the US Dollar Index poised at 92.27, maintaining a daily 91.87-92.29. 

At the time of writing, the Dollar Index was 91.96. 

Recommended: Crypto market in limbo ahead of the tapering-oriented FOMC meeting

US Dollar diving further South 

While BTC crossed $40,000 for the second time this week, the U.S Dollar index showed no signs of recovery. On the contrary, it continued to move downward. It dropped to its lowest in four weeks, thanks to Federal Reserve’s meeting.

The Fed held a policy meeting on Wednesday amidst market anticipation that it would shed light over the timings of its planned tapering.

However, the Committee seemed to be in no hurry to start tapering its QE program. Federal Reserve Chairman Jerome Powell said it was not yet time to think about raising interest rates to make matters worse.

The committee also expressed the opinion that the US economy has been recovering despite a rise in coronavirus infections. However, it also blamed accelerating inflation on “transitory factors.”

The fact that the FOMC did not see any risks surrounding inflation did not help either as it did not show any prospects of economic growth. Clearly, as the index displays, the dollar bulls are disappointed.

Recommended: Bitcoin back near $40K as economists expect Fed to stay dovish over delta variant fears

Russia ditches the Dollar

When things couldn’t get any worse, the US Dollar got another blow. Russian arms exporter announced Russia is eliminating US dollar transactions in its foreign military deals. 

According to Russia’s main defense contractor Rosoboronexport, the share of the US dollar in Russia’s military contracts with other countries is negligent. 

Most of Rosoboronexport’s contracts are currently concluded in rubles or in the national currencies of partner countries. The share of dollars in our contracts is steadily approaching zero,”

CEO Alexander Mikheyev said.

This is a part of the Russian Government’s policy to de-dollarize Russia’s economy, deliberately abandoning the USD.

Recommended: Central banks snub Bitcoin, rake in gold as inflation fears hit exchequers.

All hope’s not lost

Seeing the US Dollar Index fall may have caused concern for the dollar bulls, but the crypto family is having a hay day. Not only do they have a point to prove about crypto being a better alternative, but they also get to make fun.

Vailshire Capital Management CEO Jeff Ross compared the dollar index to the sinking Titanic.

However, the US Dollar might still make a recovery. Despite not getting clear signals from the FOMS, backers continue to hold on to expectations.

Early tapering, economic recovery, the possibility of increased interest rates, and high inflation will contribute to bulls not abandoning the dollar.

 

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