Bitcoin rallies above $87k while dollar weakens on Powell speculation after long weekend

Bitcoin surged above $87,000 during early Asia trading on Monday, extending gains as broader markets reopened after trading flat throughout the Easter holiday closure.

The digital asset’s move followed three sessions of tight consolidation, coinciding with broad dollar weakness and a record-setting rally in gold.

BTC/USD climbed from approximately $84,450 to an intraday high near $87,650 in under three hours, breaking above a multi-day falling wedge pattern. According to TradingView data, Bitcoin was trading at nearly $87,640 at the time of publication.

Bitcoin surges amid dollar weakness (Source: TradingView)

The breakout unfolded during low-liquidity conditions in early Asia hours, with the dollar index (DXY) falling to its lowest level since 2021.

This coincided with growing speculation around the potential removal of Federal Reserve Chair Jerome Powell.

As ZeroHedge reported, comments made Friday by National Economic Council Director Kevin Hassett, who stated that “the president and his team will continue to study” options regarding Powell’s position, were cited by traders as a catalyst for the dollar’s decline.

Dollar weakness triggers haven flows.

The dollar’s rapid decline, occurring while several global markets remained closed, pushed demand toward traditional and digital stores of value.

Gold prices surged to an all-time high of $3,391.62 during the same session, registering a 2.4% gain. Per Reuters, the move marked the metal’s most substantial single-day rally in months.

Digital gold in the form of Bitcoin rose in tandem, diverging from recent behavior, when both assets had moved inversely to the 10-year U.S. Treasury note. Notably, bond prices fell Monday; the US10 and CN10 plots on the chart represent bond prices, not yields, implying a concurrent rise in long-dated yields.

The Kobeissi Letter reported,

“The narrative in both Gold and Bitcoin is aligning for the first time in years:

Gold and Bitcoin are telling us that a weaker US Dollar and more uncertainty are on the way.”

The combination of a falling dollar, climbing yields, and soaring gold presents a scenario where Bitcoin is being repriced in light of perceived instability in traditional financial instruments.

As ZeroHedge framed it, the alignment of gold and Bitcoin strength during a period of fiat stress may reflect “a regime shift” where digital assets are increasingly treated as monetary hedges.

Broader market divergence

Equity markets opened weaker despite haven strength. The S&P 500 futures fell 1.54% in Monday’s early session, erasing late-week gains. Oil markets also declined, with WTI crude down more than 3%, trading near $62.83 at the session low.

This divergence between traditional risk assets and alternative stores of value mirrors conditions observed during other periods of monetary uncertainty.

Gold and Bitcoin rising together while bond prices fall and equity indices slip suggests positioning away from rate-sensitive assets and into instruments perceived as politically insulated.

Per ZeroHedge, the dollar’s descent may not stabilize quickly. If central banks like the Bank of Japan and European Central Bank respond with easing measures to counter their own currency strength, further dollar pressure could ensue.

In such an environment, Bitcoin may continue to decouple from rate-based instruments and track more closely with physical commodities like gold.

Structural implications

The correlation breakdown between Bitcoin and traditional macro proxies raises questions around portfolio allocation and asset classification.

With bond prices and equities weakening while gold and Bitcoin outperform, traders may begin to reevaluate how digital assets are categorized in cross-asset frameworks.

This move follows weeks of gradual decorrelation between Bitcoin and the DXY, as observed through 30-day rolling correlation metrics.

Should this continue, Bitcoin will lose its perception as a tech-aligned risk asset and become more of a monetary hedge with characteristics similar to commodities.

Dollar vs Bitcoin (Source: ZeroHedge)

The political dimension also looms large. While previous episodes of Trump-Fed tensions triggered temporary volatility, the current episode introduces direct discourse around potential Federal Reserve leadership changes. This may influence market pricing of future rate decisions and broader monetary policy expectations, both of which could spill into crypto markets.

As trading resumes in full across regions, Bitcoin’s behavior near the $88,400 resistance band may offer further clarity. Sustained strength above this level could attract systematic flows and trigger algorithmic buying. At the same time, failure to hold above the breakout zone may expose the asset to reversion toward mid-range levels.

For now, the asset’s performance in a mixed macro environment, combined with decoupling from equities and fixed income, positions it at the center of post-holiday trading narratives.

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