Bitcoin and Euro Show Resilience Against Dollar Amid U.S. Stock Market Slump
Bitcoin and the euro have demonstrated surprising strength against the U.S. dollar, even as the U.S. stock market experiences a significant downturn.
In an unexpected shift, options linked to Bitcoin (BTC) and the euro-dollar (EUR/USD) exchange rate are signaling growing resilience against the U.S. dollar, despite the broader weakness in U.S. equities. This trend suggests that the “sell America” trade, a move away from U.S. assets, may be gaining momentum.
Currently, Bitcoin’s short- and near-term risk reversals—measuring the demand for call options compared to put options—are slightly positive, pointing to a bullish outlook. Data from platforms like Deribit and Amberdata indicate a recovery from the previous trend, which saw a preference for puts in near-term options, reflecting bearish sentiment.
Similarly, the one-month EUR/USD risk reversal has shifted to positive, signaling a growing preference for EUR call options, according to data from Jens Nordvig, CEO of Exante Data Inc.
A call option allows buyers to benefit from potential upside in an asset, while put options provide protection against price declines. A preference for call options over put options typically signals optimism about future price movements.
The demand for Bitcoin and euro call options suggests that investors expect continued capital rotation away from U.S. assets, which have recently lost favor, and toward alternatives like Bitcoin, the euro, and gold.
On Monday, the Dow Jones Industrial Average plunged over 700 points, bringing its month-to-date decline to more than 9%. Meanwhile, the U.S. dollar index—tracking the greenback against major global currencies—dropped to a three-year low of 98, falling 10% over the past three months. Prices for longer-duration Treasury notes also decreased, pushing the 30-year yield above 4.90%.
The sell-off in U.S. assets coincides with heightened policy uncertainty, fueled by President Donald Trump’s trade war and reports of his intent to remove Federal Reserve Chair Jerome Powell, alongside his calls for a shift in U.S. economic strategy.
“We are witnessing a strategic asset allocation shift that is causing correlations to flip in a historically significant way. It’s a time for investors to take a step back and rethink their approach,” Nordvig commented on X.
Meanwhile, Bitcoin climbed above $88,000, the euro rose to 1.1575 against the dollar, its highest level since November 2021, and gold surged to a record high of $3,495 per ounce.
This strong performance from Bitcoin and the euro reflects a growing sentiment that investors are diversifying away from the dollar and traditional U.S. assets, seeking refuge in assets with potential for long-term growth and stability.
