Bitcoin and the dollar form a symbiotic bond, says BPI

Bitcoin and the US dollar are linked in a mutually reinforcing relationship, according to Lyman. He argues that Bitcoin benefits from the dollar system’s global reach, liquidity, and legal infrastructure, while the dollar benefits from the fact that much of the crypto economy still seeks a stable unit of account—overwhelmingly the US dollar rather than euro stablecoins, yuan proxies, or other alternatives.

Stablecoins are the transmission layer

Lyman highlighted Tether’s USDT as an example of how Bitcoin activity can feed back into the dollar system. Stablecoin issuers typically hold reserves in cash, short-dated Treasurys, or near-cash instruments. As a result, crypto-native demand for dollar-denominated tokens can translate into demand for US government debt and banked dollars.

He also noted that, despite political narratives that frame Bitcoin as a hedge against fiat debasement, the market microstructure still relies heavily on tokenised dollars. In his view, the anti-dollar asset and the dollar are currently sharing core “plumbing.”

The policy angle in Washington

BPI’s framing comes at a time when US policymakers are weighing whether digital assets pose a threat to dollar primacy or could instead function as an export channel for it. If Bitcoin markets are largely intermediated through dollar pairs and dollar stablecoins, the rationale for a strictly anti-crypto stance becomes less straightforward.

At the same time, the relationship is not without risks. Reliance on offshore stablecoin issuers, concentrated exchange liquidity, and shifting regulation can create fault lines. Lyman warned that if stablecoin rules tighten sharply or if a major issuer faces redemption stress, Bitcoin liquidity could be affected because a significant portion of market working capital functions as dollar-proxy collateral.

What the market structure implies

The practical takeaway is not that Bitcoin has become a “dollar appendage,” but that the two systems reinforce each other more than some critics or maximalists acknowledge. Bitcoin still provides an alternative savings asset and a non-sovereign monetary network; however, its current growth remains closely tied to dollar settlement, dollar liquidity, and dollar-denominated investor demand.

Risks to consider

Lyman described the relationship as symbiotic “until the plumbing breaks.” Key pressure points include stablecoin reserve transparency, stress in the Treasury market, banking access for crypto firms, and regulatory efforts to push more activity onshore. Any major disruption in these areas would test whether Bitcoin can sustain the same depth of liquidity without dollar wrappers playing a central role.

What to watch next

• Whether US stablecoin legislation accelerates and favors regulated dollar issuers
• Changes in Bitcoin spot and derivatives liquidity across USD and USDT pairs
• Treasury holdings reported by major stablecoin issuers
• Signs that non-dollar crypto settlement rails are gaining meaningful share
• Whether Washington treats crypto as a tool for dollar distribution rather than only as a rival