Short positions against the U.S. dollar have reached their highest levels since 2012, according to Bank of America’s (BofA) Fund Manager Survey (FMS) for February 2026.
The scale of short bets against the currency is now the largest since the bank began publishing the survey, which further pointed to further deterioration in the U.S. labor market as the primary downside risk, as reported by The Wall Street Journal on February 17.
As per the same report, traders have likely turned sharply bearish on the U.S. dollar due to the de-dollarization narrative, even though hard data might not support it. At the same time, the increasingly dovish expectations for the Federal Reserve’s rate trajectory have also added to the pressure.
Dollar loses steam; risk assets flourish
The macro backdrop highlights entrenched skepticism toward not just the dollar but U.S. assets more broadly. Historically, such situations have presented a constructive backdrop for risk assets.
For instance, a weaker dollar has often acted as a tailwind for Bitcoin (BTC), which tends to move inversely to the U.S. Dollar Index. Accordingly, with speculative short positions on the dollar at record highs, a sustained downside could provide meaningful support for crypto markets.
Of course, the dollar could also stage a quick rebound if the U.S. aftermentioned labor market shows signs of renewed strength. One such potential scenario could involve, for example, major central banks pivoting more decisively toward easing in response to softening economic data.
Peter Schiff, chief executive of Euro Pacific Asset Management, however, cautioned earlier this month that the United States could face a significantly deeper economic downturn in 2026, driven by unsustainable sovereign debt and waning confidence in the U.S. dollar, which has now become apparent.
Drawing comparisons to the 2008 financial crisis, the analyst suggested the next downturn will originate at the federal level, with U.S. Treasuries and the dollar itself becoming the epicenter of instability. Unlike in 2008, Schiff does not expect the dollar to strengthen during the next downturn. Instead, he believes the currency could come under severe pressure.
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