Bitcoin’s price has seen a drastic surge from $108,000 to over $120,000 in less than a week, continuing its strong upward trend and setting new record highs almost daily.
While Bitcoin’s value in US dollars keeps rising, the increase is less pronounced in other fiat currencies like the euro and British pound.
This discrepancy is attributed to the weakening of the US dollar. Since January, the dollar has weakened by more than 10% against the pound and continues to decline against the euro.
This decline has become a significant focus for market participants, who interpret it as a sign of economic instability and a potential driver for what some are referring to as a new era of “bitcoinization.”
Weakening US Dollar
Analysts at Kobeissi Letter have observed that the market is in “crisis mode,” noting that Bitcoin’s value is increasing at an almost vertical rate.
According to the firm, Bitcoin is in uncharted territory as US interest rates rise, the dollar weakens by 11% in six months, and over $1 trillion has been added to the total market capitalization of cryptocurrencies in the last three months.
The economic analysis platform also highlighted two critical events that have influenced Bitcoin’s performance in 2025: the pause on US tariffs on April 9 and the passage of President Trump’s “Big Beautiful Bill” on July 1.
Since then, Bitcoin has gained over $15,000 in value, reinforcing its inverse correlation with the US Dollar Index.
Additionally, institutional investors are increasingly entering the Bitcoin market. BlackRock’s spot Bitcoin ETF, IBIT, has accumulated $80 billion in assets under management in just over a year, a milestone that the leading gold ETF took more than 15 years to achieve.
Capital Rotation into Bitcoin
As Bitcoin’s value rises, traditional assets are starting to lag behind. When measured in Bitcoin, the S&P 500 is down 15% year-to-date and has decreased by nearly 99.98% since 2012.
While some see this as a warning for traditional markets, others view it as a sign that Bitcoin is entering a new phase of dominance that could attract more global liquidity to the asset.
Jamie Coutts, the chief crypto analyst at Real Vision, has echoed this sentiment, noting that Bitcoin’s 40% rally since April aligns with a resurgence in global liquidity following a three-year decline.
According to Coutts, a 1% increase in global liquidity could result in a 20%+ rise in Bitcoin’s value, illustrating the significant capital rotation into the cryptocurrency market.
He stated:
“While this straightforward model anticipates the ongoing influx of capital from around the world into Bitcoin, it does not anticipate the inevitable ‘oh sh#t’ moment of panic buying that will occur…eventually. It will be the best of times, it will be the worst of times.”
