The market shoots first and asks questions later. The surge of BTC/USD to a record high above 111,000 was fueled by investor optimism about the imminent adoption of U.S. stablecoin legislation by Congress. As a result, the cryptocurrency outpaced other financial market assets by a wide margin. Traders have even begun to question whether it now qualifies as a safe-haven asset.

Performance of Bitcoin vs. Other Financial Assets

At first glance, a potential favorable ruling by Congress on stablecoins seems illogical. Their issuers have accumulated $250 billion, surpassing the deposit base of regional U.S. banks. Some, including industry leader Tether, have even begun to say they are ready to pay interest on savings—just like traditional American banks. Naturally, banks don't like this competition, which raises questions about the logic of such legislation.

In truth, the issue lies in the U.S. government's intention to distinguish between domestic and foreign stablecoin issuers—a move that could create significant hurdles for companies like Tether. It's no surprise that the industry leader is approaching Congress's actions with caution.

Stablecoin Market Structure

Nature abhors a vacuum. Given Donald Trump's penchant for all things American, it's reasonable to assume that Tether is being deliberately pushed out of the market. Its place is ready to be taken by commercial banks. For example, Bank of America has announced it is prepared to issue its own token if legislation permits.

Thus, congressional activity around stablecoins may in reality impose more restrictions than it creates opportunities. It's unlikely to attract a wave of new institutional investors. Whether it will be worth it in the end remains to be seen.

For now, euphoria continues to dominate the crypto market, and its correlation with U.S. stock indices appears broken. The S&P 500 is deeply concerned that uncertainty in White House policy could eventually trigger a recession—bad news for equities. At the same time, BTC/USD's rise amid fiscal woes and tariff threats has given Bitcoin a new label: safe-haven asset.

There are also rumors that, along with rising geopolitical tensions and China's economic expansion, cryptocurrency will help dethrone the U.S. dollar as the world's primary reserve currency. Investors are increasingly losing faith in the greenback. Even Scott Bessent's comments that "the dollar isn't as weak as it seems" have failed to impress. The fall in the USD index is mainly due to the strengthening of other global currencies.

From a technical perspective, on the BTC/USD daily chart, if the bulls fail to retake 111,500 or cannot hold above the pivot level of 109,350, the likelihood of a reversal pattern (1-2-3) increases. If this pattern is triggered by a drop below 106,750, it would make sense to consider selling Bitcoin. Until then, the strategy remains to buy on declines.