BTC/USD and USDT Cement Dollar Liquidity, Policy Institute Says

Published: 2026-04-05 23:13:18 |

Bitcoin Policy Institute analysis says the Bitcoin and US dollar relationship is not zero-sum. It argues that BTC’s primary trading paths, especially BTC/USD and BTC/USDT, can increase demand for dollars through “structural dollar liquidity” inside exchanges. Sam Lyman says dollar-denominated pairs account for about 70% of Bitcoin global trading volume. He highlights USDT as a key conduit because it is closely pegged to the dollar via cash and short-term US government debt, reinforcing BTC’s dollar-linked valuation channel. The report compares this setup to a modern petrodollar system, with Bitcoin trading dollar assets acting as today’s liquidity and benchmark mechanism. It adds academic support from an IMF working paper showing crypto and the dollar can co-move during stress, so USD strength may affect Bitcoin valuation metrics. On policy, China’s crypto and stablecoin bans are framed as capital-control tools, while mining presence persists. Cambridge estimates China-linked operations still represent about 36% of global Bitcoin hashrate. For traders, the key takeaway is that BTC price discovery and institutional access may remain dollar-dependent in the near term, tying risk-on/risk-off flows to BTC/USD and USDT-driven liquidity.

Neutral

The article’s core view is that BTC/USD and BTC/USDT market structure can reinforce dollar liquidity rather than create a clear zero-sum outcome. That framing is mildly supportive for market functioning (BTC remains closely linked to USD liquidity), but it also implies BTC can react to USD strength, which can cut both ways during risk-off. Short term: if USD strengthens or stablecoin flows tighten, BTC may face pressure through valuation metrics tied to BTC/USD and USDT liquidity. If stablecoin usage expands, the structural dollar liquidity could help stabilize liquidity conditions. Long term: persistent dollar-dependence in price discovery suggests BTC institutional access and benchmark behavior may remain USD-driven, limiting the upside from any narrative that BTC decouples from the dollar. Overall, the information points more to a stable structural linkage than to an immediate directional catalyst for BTC price.