US dollar extends decline as Bitcoin breaks $111,000 for the first time, ETFs pull in $609M

The US dollar lost more ground on Thursday, falling against a wide range of currencies, as Bitcoin crossed $111,000 for the first time ever.

The drop in the greenback followed political chaos in Washington, a failed bond auction, and renewed doubts about whether foreign investors are still willing to fund American debt.

According to Bloomberg data, the immediate pressure came from a weak 20-year Treasury bond sale that priced far higher than markets expected, forcing yields to spike and confidence to sink.

The Treasury sold $16 billion in 20-year bonds at a yield of 5.047%, noticeably higher than traders had anticipated. By the end of the auction, yields on those bonds rose further to 5.127%, the highest since November 2023, showing just how badly demand dropped off.

That hit the dollar hard. The euro climbed 0.4% to $1.1334, touching a two-week high, while the yen followed with similar gains. The failed auction signaled that buyers are demanding bigger returns to hold long-term US debt, and that uncertainty over Washington’s finances is spreading.

Republican infighting stalls tax bill as foreign capital pulls back

The bond auction flopped just as President Donald Trump failed to win support from Republicans on a controversial tax bill. Trump met with House Republicans on Tuesday, trying to push through legislation aimed at lowering taxes, but he didn’t convince the holdouts.

House Speaker Mike Johnson said hardliners still refuse to back the plan, arguing it doesn’t cut government spending enough to justify adding more to the deficit. Nonpartisan analysts estimate the bill would add between $3 trillion and $5 trillion to the national debt.

Foreign investors are watching this play out and stepping back. Traders are now wondering if US officials are deliberately letting the dollar fall to support trade negotiations happening on the sidelines of the Group of Seven finance meetings in Canada.

At the same time, Trump’s global tariff campaign has gone abruptly quiet. The temporary 90-day break on new trade barriers is almost over, and there are no new deals. This silence has raised more questions than answers about the future of US trade policy, leaving markets nervous as the clock runs down.

Bitcoin explodes past record high as ETFs draw massive inflows

While the dollar was sinking, Bitcoin was flying. The crypto asset surged past $111,000, continuing a rally that started just 48 hours earlier. On Monday, Bitcoin had already cleared $106,000, found support around $105,200, and then took off again, smashing its previous all-time high of $109,588, set on January 20.

Analysts pointed to macro pressures like weaker dollar performance, rising bond yields, and political uncertainty as key reasons why crypto is gaining traction.

ETF flows backed it up. On May 21, spot Bitcoin ETFs recorded $609 million in net inflows, the sixth day in a row of positive flows. Ethereum also picked up steam, with spot ETFs bringing in $587,100 over four days.

Wall Street is starting to reposition, too. Morgan Stanley just raised its outlook on most US assets, shifting to “overweight” on both stocks and Treasuries. Their analysts pointed to falling recession risks and the chance for rate cuts.

But they singled out the dollar as the exception. In a note sent Tuesday night, the firm wrote that it expects the dollar to keep weakening, citing “a convergence in US rates and growth to peers.” The message was clear: US investments might outperform, but not the dollar.

The bank also cut its global GDP growth forecast. They now expect output to slow from 3.5% in 2024 to 2.5% by the end of 2025. Even without a full-blown recession, that kind of slowdown is enough to move capital around, especially toward crypto, which many investors now see as a hedge against fiat instability.

If Bitcoin keeps going, its next target is already on the radar: $120,000. No major resistance levels are in sight, and with inflows rising and traditional markets wobbling, more buyers are lining up.