Category: Crypto

• US Dollar faces heightened risks politically and economically; investors flock to safe-haven assets.
• Trump’s economic policies and Fed tensions contribute to dollar’s market volatility and depreciation.
• Persisting trade tensions and unpredictable policies accelerate shifts from dollar to other currencies.
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Recently, the has been encountering rising risks both politically and economically. The US Dollar Index reached its lowest point in three years, dropping below 98 on the week’s first trading day. This trend indicates that investors are shifting away from the dollar in favor of safe-haven assets.

Tensions Between Trump and Powell Disrupt the US Dollar

President Donald Trump’s threat of impeachment against Fed Chairman Jerome Powell played a major role in the dollar’s depreciation. Trump’s emphasis that Powell’s removal “can’t happen fast enough” is seen as not only a political message but also a challenge to the Fed’s independence. This is priced as a systemic risk by the markets.

The Fed’s decision to keep unchanged shows that it prioritizes the fight against inflation, while Trump wants a looser monetary policy to support growth. The conflict between these two different approaches increases uncertainties regarding monetary policy.

Political pressure on the Fed is having a profound impact not only on bond markets but also on FX markets. Trump’s aggressive rhetoric is undermining the dollar’s status as a “safe haven”. Investors reduced their holdings of US assets in their portfolios and accelerated their shift towards alternative currencies such as , and .

The fell from a peak of 110 after Trump’s election victory to 98 today. This decline can also be seen as evidence that Trump is moving away from the precious dollar policy. The “strong dollar” rhetoric advocated by the White House in the past has been replaced by a competitive devaluation strategy. As a result, the Trump administration has begun to move from the precious dollar to the worthless dollar phase in trade wars.

Global Trade Tensions and Volatility

Chicago Fed President Austan warned over the weekend that tariffs could have a negative impact on economic activity until the summer months, a statement that also confirmed concerns about growth.

Trump’s global trade policies also continue to put pressure on the dollar. In particular, the lack of a concrete negotiation step with China and the inconclusive negotiations with countries such as Japan increase global uncertainty.

In this environment, US multinationals have started to extend the maturities of their foreign exchange hedges. This shows that they are defending against not only short-term but also medium and long-term dollar fluctuations. While some companies have extended their hedge maturities to 2-5 years, this strengthens the comments that the perception of weakness on the dollar is not temporary and is becoming structural.

US Dollar’s Technical Outlook

The dollar started the week at 98.30, down more than 1% due to Trump’s harsh rhetoric against Fed Chairman Powell, and maintained its bearish outlook in the first hours.

The last downtrend in the dollar found support at the 100 level in the last quarter of 2024. In the ongoing process, Trump’s election as US President and the strong dollar perception helped the dollar to rise rapidly against six major currencies. However, Trump’s aggressive growth policy and global tariff plans created serious uncertainty in the short term.

Since the start of the year, the DXY has been declining steadily, recently breaking the psychological support level at 100 and continuing its sharp fall. From a technical perspective, the last upward trend concluded in the Fibonacci expansion area (between Fib 1.272 and Fib 1.618). The downward trend, which began from the 110 peak in January, is now moving towards the Fibonacci expansion area once more, reflecting the most recent rise.

In this scenario, the level of 97.5 (Fib 1.272) will be an important support to watch. If this support level is broken, the downward movement might continue and find a possible endpoint in the 94-97 range. However, if the DXY holds steady around the 97 level, there could be an increase in buying interest, potentially driving it back up toward the 100 level. Despite this possibility, the current technical indicators suggest that the bearish trend is stronger at the moment.

Trump’s Influence on Dollar’s Direction Persists

President Trump remains a key factor influencing the dollar’s direction. As the election period begins, markets are actively factoring in Trump’s economic policies and his attempts to influence the Fed. Despite this, the Fed remains committed to prioritizing price stability and combating inflation over promoting growth.

In this contentious environment, investors are distancing themselves from the dollar, focusing more on the uncertainties within the US economy, even though the Fed is inclined to maintain high interest rates. If this trend persists, the dollar may continue to weaken.

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Disclaimer: This article is written for informational purposes only. It is not intended to encourage the purchase of assets in any way, nor does it constitute a solicitation, offer, recommendation or suggestion to invest. I would like to remind you that all assets are evaluated from multiple perspectives and are highly risky, so any investment decision and the associated risk rests with the investor. We also do not provide any investment advisory services.

Opinion by: Alon Muroch, founder of SSV Labs

Even though Ethereum remains a leader in terms of total value locked (TVL), things aren’t looking great. Network activity is hemorrhaging, and momentum is slipping. Ethereum has become locked in a fight for its future. Without meaningful change, Ethereum risks becoming inaccessible to the builders and users it needs to thrive. Ethereum needs fresh ideas to bolster the ecosystem out of its slump, unify it, and genuinely support innovation.

Enter based applications (bApps), which are any application or service that uses the Ethereum validator set for security. Inspired by the based movement, bApps enable any project to bootstrap directly from the Ethereum layer 1 (L1), enabling interoperable, scalable and cost-effective development.

High stakes and high costs

The recent decline in network activity highlights a deep issue across Ethereum, and it boils down to UX. The race to scale a blockchain isn’t just about TVL and transactions per second (TPS). It’s about the experience of users and developers who co-create the ecosystem. Ease of development and interoperable developer ecosystems and applications are paramount. Improving the developer experience is crucial for improving user experience, which drives adoption.

Today, builders are presented with two options. The first and more popular one is restaking, which has become the default mechanism for bootstrapping new services by locking up validators’ withdrawal keys or large amounts of capital for security. That leaves teams with only one other inconvenient alternative: self-bootstrapping. Building a validator set from scratch is resource-heavy, technically complex and often starts off centralized. Both choices are limiting for builders and don’t solve the fragmentation problems we see today in Ethereum.

It is not just builders but validators that are affected by this system. In the current restaking setup, validators who want to earn more yield by supporting new services must restake, lock up their withdrawal keys, and take on additional risk. By locking up withdrawal keys to secure applications with slashable capital, validators are exposed to cascading risks, which, at scale, could affect Ethereum itself — a core departure from Ethereum’s founding vision.

bApps are more secure

bApps provide a third, more accessible option for self-bootstrapping and restaking. Using based security infrastructure drastically lowers entry barriers for any size protocol to build securely and sustainably, all while preserving the traditional network effects of Ethereum. Validators are incentivized to join through risk-free yield opportunities; developers can affordably access security to build; and users benefit from a unified and interoperable ecosystem.

Recent: SSV Network to create ‘based’ apps infrastructure for Ethereum

Mission-critical services like rollups, bridges and oracles don’t need to reinvent the wheel. They simply plug into an existing, trusted security model. Using Ethereum validators as a primary security base, any out-of-protocol service can inherit the Ethereum L1’s decentralization and Sybil resistance. It’s also possible to extend this paradigm beyond Ethereum, enabling other L1 validators to secure bApps. This potentially turns bApps into a marketplace for multichain security, dramatically reducing the complexity (and cost) for developers and raising the bar for the entire ecosystem, offering a “based” path forward.

bApps empower validators to earn more with their existing stake. By primarily using the validator principle as non-slashable security, validators can opt into many services through their existing Ethereum validator role without needing to restake or supply extra stakes. This would encourage broader validator participation, especially from smaller or more risk-averse operators, which is excellent considering solo stakers are an important ecosystem pillar.

bApps unlock scalability

bApps also revolutionize Ethereum’s current bootstrapping ecosystem, which relies heavily on slashable capital. In restaking, one participant’s gain may directly correspond to another’s loss, creating a zero-sum model. Building a competitive dynamic where participants must add or reallocate resources instead of sharing them, consequently working against new entrants by creating competition for limited attention and resources.

The based economy, conversely, promotes an infinite-sum game, transforming competition for resources into a synergistic environment where new applications, services and participants increase the overall value of the platform. Each new validator increases security for bApps, and each new bApp provides new opportunities for validators. This infinitely scalable model breaks free from the limitations of a zero-sum model, enabling seamless bootstrapping, rewarding innovation and building more secure, inclusive and resilient ecosystems.

Unifying Ethereum’s fractured ecosystem

For Ethereum to grow, fragmentation has to be addressed. Builders need building blocks, which need to be secure, low-cost, interoperable and scalable. Think about what cloud computing did for Web2. BApps offer just that — by introducing an infinite-sum game, they unlock scalability and provide a safe and affordable way to bootstrap with Ethereum’s proof-of-stake network.

If Ethereum is to be the foundation of tomorrow’s decentralized world, it must empower the builders of today. The way forward is to solve Ethereum’s user and developer experience problem with a based infrastructure. Going based is the clear solution.

Opinion by: Alon Muroch, founder of SSV Labs.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.