Bitcoin and US Dollar Tied Together in Symbiotic Relationship

The relationship between Bitcoin and the US dollar has been a topic of discussion among cryptocurrency enthusiasts and experts. However, according to the Bitcoin Policy Institute (BPI), the two have a de facto symbiotic relationship.

Sam Lyman, the institute's director of research, explained that the largest trading pairs for BTC are typically USD-based, specifically BTC/USD and BTC/USDT. This means that when people trade in Bitcoin, they are often exchanging it for US dollars or a stablecoin pegged to the dollar.

This may seem counterintuitive at first, as one might assume that Bitcoin's rise would weaken the dollar system. However, Lyman argued that Bitcoin plays a complementary role with the dollar, generating demand for the U.S. currency in the process.

Lyman drew a parallel between this relationship and the petrodollar system, which emerged in the 1970s as the global standard for oil pricing. In both cases, a certain currency (either the US dollar or Bitcoin) becomes the primary unit of account for transactions, generating demand for it in the process.