Bitcoin Smashes $118k Barrier—But Still Lags Behind ATH in Euros and Pounds

Bitcoin's bull run just hit hyperdrive—crushing the $118k ceiling with ease. Yet for European and British hodlers, the party feels slightly less explosive.

The ATH Illusion

While dollar-denominated charts scream 'moon,' euro and pound valuations stubbornly cling below record highs. Someone forgot to tell BTC it's supposed to be borderless.

Currency Wars

Fiat's fickleness strikes again—proving even crypto can't escape the gravitational pull of central bank shenanigans. Maybe Satoshi should've coded a forex hedge into the whitepaper.

As traditional finance scrambles to explain the divergence, smart money's already pricing in the next leg up. After all, since when has Bitcoin waited for permission to break rules—or exchange rates?

Why the USD ATH came first

Bitcoin’s USD-denominated rally was partly driven by macro shifts favoring non-dollar currencies. US interest rate expectations have softened, with money markets pricing in two quarter-point cuts by September. Meanwhile, the European Central Bank has shown little inclination to ease further after June’s rate pause. Eurozone PMI data also surprised to the upside, boosting cyclical demand for the euro.

These trends weakened the dollar broadly, pushing the DXY to its lowest levels since January. Because Bitcoin is typically quoted in USD, a weakening dollar inflates the BTC-USD rate even when BTC’s purchasing power in other currencies remains unchanged.

Currency math explains the rest. The BTC-USD rate is simply a product of BTC-EUR and EUR-USD, or BTC-GBP and GBP-USD. When EUR-USD or GBP-USD rises, BTC-USD climbs, even if BTC-EUR and BTC-GBP stay flat. That’s exactly what happened in July. At the peak, EUR-USD ROSE to 1.173, while GBP-USD pushed above 1.363, enough to drive the dollar quote to record levels even as euro and pound quotes stalled.

While this might seem like a technicality, it has real implications. First, investors outside the US aren’t seeing the same returns. For euro-based investors who bought the March high NEAR €97,500, Bitcoin remains slightly underwater, while Americans proclaim new records.

Second, FX risk now plays a larger role in crypto investing. Spot Bitcoin ETFs in the US are priced in dollars, but Europe-listed products track BTC-EUR. When the euro strengthens, those funds lag in NAV growth and flows. Since early July, AUM in euro-denominated ETPs has grown more slowly than US ETFs despite similar BTC performance.

Third, it matters for treasury adoption. Corporate treasuries looking to hold Bitcoin must evaluate it in terms of their own reporting currency. A British or European company may look at July’s USD ATH and conclude Bitcoin hasn’t yet broken new ground, limiting its appeal as a reserve asset until local fiat valuations catch up.

The euro’s strength explains why BTC-EUR was hit the hardest. The EXY rose 2.6% over the past month, far outpacing the 0.9% gain in BTC-USD and overwhelming any crypto-native momentum. BTC-EUR ended the period lower than where it started, down 1.7% despite Bitcoin’s global rally.

Sterling has been more stable. The BXY rose just 0.3%, nearly in line with the 0.3% gain in BTC-GBP. As a result, BTC-GBP was within 4% of its prior record when traditional UK markets closed. UK investors may soon get their local ATH, with Bitcoin now £2,100 away from a new record. In euros, Bitcoin is even further away, with 5% more to go to hit its peak, which was hit in January.

If the dollar stabilizes or rebounds, Bitcoin’s USD pair may stall, unlocking upside for BTC-EUR and BTC-GBP. A reversal in the strength of the euro and pound WOULD allow Bitcoin’s value in other currencies to catch up with the USD rally.

Three macro scenarios could close this gap. First, the Fed could cut rates just once instead of twice as projected, thus slowing dollar outflows. Second, the ECB could hint at a renewed risk for a recession, weakening the euro, and bringing new strength to BTC-EUR. Finally, political jitters in the UK could cause the sterling to slip.

In each case, the relative value of foreign currencies would drop, lifting BTC-EUR and BTC-GBP even if Bitcoin itself goes sideways.