Is the US dollar entering a Bear Market? Gold and Bitcoin become the new darlings of the market.

In the past, many investors profited by holding US dollars and investing in the US stock market, but with the weakening of the dollar, this strategy has resulted in about a 14% loss this year. International investors are beginning to reassess the hedging costs of dollar assets and consider adjusting their investment strategies. Experts predict that the euro may continue to appreciate in the coming years, while the weakness of the dollar could drive up the prices of safe-haven assets such as gold and Bitcoin.

Buying USD + Buying US stocks has incurred a loss of 14% this year.

For many years, this has been a profitable trade for investors in London, Paris, and Tokyo: buying US dollars and investing the proceeds in the S&P 500 index and Nasdaq stocks. The returns on US stocks are not only far higher than the returns on domestic stocks, but the returns have also been amplified due to the stable appreciation of the US dollar.

However, after U.S. President Trump launched a global trade war, the script suddenly changed. The S&P 500 index has fallen by 6% this year, which means a 14% loss for investors measuring returns in euros and yen (, as the dollar index has declined by 8% so far this year, especially against the yen and euro ). The speed of this collapse, combined with the White House's constant unpredictability, has made investors who originally hoped the U.S. would become the ultimate safe haven and source of huge returns feel uneasy.

The cost of hedging against the US dollar is high.

According to a report by Bloomberg, many foreign investors have finally realized the risks of putting large amounts of capital into the dollar. Many of these institutions are now competing to add currency hedges to their U.S. stock portfolios.

Traders concerned about a decline in foreign exchange typically sell dollars in the forward market. For investors in Swiss francs or yen, the hedging cost for three months is approximately 4% on an annualized basis, while for euro investors, it is slightly above 2%. The result is the ability to offset the decline of the dollar, but it also means losing any currency gains, and the rolling costs may also erode returns.

Options are another strategy; according to data from the U.S. clearinghouse, trading of Euro to US Dollar contracts is setting new records. However, the greater the volatility, the higher the hedging costs. For Euro investors, costs have increased by 15% since the beginning of this year.

The era of American exceptionalism has begun to decline.

Is this the beginning of the gradual withdrawal of international investors from the U.S. market? Because the amount of investment in the U.S. is huge, even a small portion of assets flowing out of the U.S. could lead to greater distortions in exchange rates and global asset prices.

Many strategists indicate that the situation of a strong euro and a weak dollar will last for several years. George Saravelos of Deutsche Bank believes that "the era of American exceptionalism has begun to decline." He predicts that by the end of 2027, the euro to dollar exchange rate will rise to 1.30 dollars, reaching a ten-year high. Kirstine Kundby-Nielsen, a currency analyst at Danske Bank (, believes that Europe is becoming a more viable option for investors and forecasts that the euro will reach 1.22 dollars within the next 12 months.

The Euro to US Dollar exchange rate has increased by nearly 10% so far this year, currently quoted at 1.1334, leaving a 7.6% potential increase to 1.22, and nearly a 15% increase to reach 1.3.

A weaker US dollar will benefit gold and Bitcoin.

The depreciation of the US dollar usually drives up gold prices, as investors seek safe-haven assets, and gold is priced in US dollars, which also boosts its upward momentum.

Bitcoin, which is seen as digital gold, seems to have similar conditions. Recently, Bitcoin has led the rise in the stock market and appears to be making efforts to establish a base for an upward attack during this pullback. The most optimistic about Bitcoin, ARK Invest, recently issued the "2025 big ideas" report, adjusting the price target for the Bitcoin bull market in 2030 to $2.4 million.

) Ark Investment: If considering the active supply of Bitcoin, BTC will look at 2.4 million dollars in 2030 (.

Is the US Dollar Entering a Bear Market? Gold and Bitcoin Become the New Darlings of the Market, First Appearing in Chain News ABMedia.