Cash decreases to 88 cents on the dollar, while Bitcoin rises to $3.26 for those who purchased prior to the ‘crash.’

If you possess either US dollars or Bitcoin, you are slightly less wealthy this morning compared to last night. It makes no difference whether you have cash in your pocket or sats in your wallet; both currencies have diminished in purchasing power today relative to yesterday.

This is due to the decline in Bitcoin’s value, and the dollar has also weakened, although the sensation is not entirely the same. That subtle decrease before your morning coffee typically does not factor in the dollar’s actual value, unless you reside outside the US.

Today’s charts clearly illustrate this. BTC dropped approximately 3% overnight, a shift that feels personal for holders, prompting reactions like “see,” as if it validates a viewpoint.

Bitcoin drops 3% overnight

Concurrently, the dollar weakened on the foreign exchange market, declining about 0.7% today according to the DXY index, a change that is minor enough to overlook but significant if you are tracking performance.

The dollar falls 0.7% overnight

The distinction lies in the fact that one of these movements is labeled a dump, while the other is considered background noise, as the paper in your wallet still states one dollar.

This is the nuance with cash; it appears unchanged while it undergoes transformation.

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Jan 28, 2026 · Gino Matos

The dollar isn’t worth a dollar anymore

The crumpled dollar you recently discovered in an old jacket you haven’t worn in three years may seem the same, but it is not. If you find this difficult to grasp, Frank Reynolds provides an excellent explanation.

Jokes aside, for a clearer understanding, you should start with purchasing power.

The Bureau of Labor Statistics CPI-U index, not seasonally adjusted, was 300.840 in February 2023, according to the BLS.

The most recent complete CPI-U figure available is from December 2025, which stands at 324.054 on FRED. This represents the gradual loss of value, the aspect you do not perceive on any given morning.

Calculating 300.840 divided by 324.054 reveals that the dollar from February 2023 has approximately 92.8 cents of purchasing power by December 2025, before considering foreign exchange factors.

Now, add the dollar’s external value, as the essence of DXY-style discussions is that the world prices you in real time.

The chart indicates a roughly 4.56% decline in DXY over the three-year period, and combining that FX aspect with the CPI aspect leads to the realization that “my dollar is really 88.7 cents.”

0.955 times 0.928 results in approximately 0.887, or 88.7 cents, and this is before delving into the more complex argument regarding how individuals experience inflation differently based on their purchases.

Dollar performance over the last 3 years

There exists a more conservative method to conduct the same comparison, which is significant because critics may attempt to challenge the index we select.

The broad trade-weighted dollar index, DTWEXBGS on FRED, remains nearly flat over the comparable timeframe, adjusting the composite “cash reality” to about 92.5 cents instead of 88.7.

Thus, we can at least position it within that range, and it is difficult to dispute; your $1 bill is still a $1 bill, and in real terms, it purchases something closer to $0.89 to $0.93 of what it once did, depending on whether you reference DXY or a broad trade-weighted basket.

This serves as the baseline, and it is unrelated to crypto; it is merely the quiet mathematics of experiencing time.

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Jan 21, 2026 · Liam ‘Akiba’ Wright

And then there is Bitcoin.

On February 3, 2023, BTC was approximately $23,424. Using that initial value provides a perspective that is often overlooked during a downturn, reflecting an increase of about 226% from then to now.

A 226% increase translates simply, $1 becomes about $3.26.

This is not a forecast, nor is it a motivational speech; it is merely arithmetic, 1 plus 2.26.

Bitcoin performance over the last 3 years

A $1 “Bitcoin purchase” in early February 2023 becomes roughly $3.26 today, even after the recent decline.

A $1 bill from early February 2023 translates to approximately $0.89 to $0.93 in real terms by late 2025, depending on whether you prefer the DXY perspective or the broad trade-weighted caution.

Individuals may have various reasons to dislike Bitcoin, many of which are valid, but it is challenging to observe that scoreboard and maintain the belief that cash is the secure option simply because it does not fluctuate on a chart every minute.

The part nobody wants to say out loud, cash has volatility too

Many individuals perceive volatility as red candles.

They do not recognize volatility in the form of rising grocery prices while their salary remains unchanged, or in the increasing costs of vacations each year, or in rent escalating even when their living space does not expand.

This still constitutes a price chart; it merely exists within your daily life.

CPI serves as the public representation of that narrative; it is imperfect, averaged, and influenced by politics, as all measurements tend to be, yet it remains the best widely accepted benchmark available.

When CPI-U rises from 300.840 to 324.054, it signifies that the same dollar now buys less. There is no drama, no liquidation cascade, no influencer with a shocked expression, just a steady decline.

A significant portion of the public discourse surrounding Bitcoin becomes fixated on whether it qualifies as “money.”

I do not believe that argument is necessary here. The human interest aspect is more straightforward; people save, they wait, they strive to preserve the value of their labor, and the default savings method for most has been cash or cash-like assets, leading to shock when they realize the definition of “safe” has subtly changed.

This explains why Bitcoin continues to re-enter discussions even after every downturn. It presents a different type of risk. It is loud, social, and something you can observe in real time, and that visibility makes it emotionally more challenging.

Cash appears tranquil, and that tranquility is the objective, yet the mathematics reveal that this calm comes at a cost.

To clarify, this is not an endorsement for everyone to become a Bitcoin maximalist. It serves as a reminder that what we consider neutral is not truly neutral.

What today’s drop actually tells you about the next year

Bitcoin’s 3% drop overnight is not the main story; it serves as the entry point.

The real narrative revolves around the macroeconomic context that leads to such clusters of movements and what it suggests for the upcoming months. When real yields are elevated, risk assets often feel heavier.

TradingEconomics reports the 10-year TIPS yield recently near the high 1% range, indicating that “real return” is accessible within the traditional system, which can divert attention from speculative assets and restrict the financial environment that Bitcoin typically thrives in.

Liquidity is also crucial. The Federal Reserve’s balance sheet, monitored as total assets on FRED, has been a reliable indicator of overall financial conditions, not due to any magic, but because it provides one of the clearest public signals regarding the tightness or looseness of the system.

When liquidity diminishes, leverage becomes costly, and the marginal buyer becomes more cautious.

Additionally, consider the new market structure, which includes ETFs.

This infrastructure alters the dynamics of Bitcoin’s demand and influences how narratives translate into flows. Spot Bitcoin ETFs experienced approximately $5.7 billion in withdrawals between November and January.

Sentiment can shift rapidly when the “easy access” vehicle also serves as the “easy exit” vehicle. Regardless of your perspective on this framing, the data point is significant as it indicates where marginal pressure may arise.

Combine these three elements—real yields, liquidity, and flows—and you obtain a practical framework for contemplating the next 3 to 12 months without pretending to predict Tuesday.

If real yields remain high and liquidity stays constrained, Bitcoin can still perform well over extended periods, though it may experience fluctuations, induce fear, and encounter more sharp declines.

If the macro environment shifts towards more accommodating policies and yields decrease, Bitcoin typically regains its momentum.

If a risk-off sentiment prevails and leverage unwinds, Bitcoin will be affected alongside everything else for a time, and the long-term comparison to cash will not vanish, but it may lose its emotional appeal in the moment.

The takeaway I keep coming back to

Most individuals believe they are choosing between stability and volatility.

In reality, they are selecting between visible volatility and invisible volatility.

Over the past three years, Bitcoin has been the prominent asset that still transformed $1 into approximately $3.26, even after a significant downturn.

Cash has been the silent asset that converted $1 into something like $0.89 to $0.93 in real terms, depending on whether you favor the DXY perspective or the broad trade-weighted dollar approach, anchored on CPI and the overall dollar.

This is why this moment is significant. Not because Bitcoin has declined; it consistently does. It matters because every dip creates a similar psychological trap; individuals focus on the red candles and overlook the gradual decline in the background.

They awaken feeling poorer and attribute blame to the asset that fluctuated.

They rarely hold accountable the asset that remained unchanged.

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