Dollar's Index Continues to Drop, Potentially Paving the Way for Bitcoin's Rise

Dollar's Index Continues to Drop, Potentially Paving the Way for Bitcoin's Rise

In a notable development, the price of Bitcoin (BTC) has been trading within a 10% range from $100,000 to $110,000 since the end of May, according to data from CoinMarketCap. This stability comes amidst a significant decline in the U.S. Dollar Index (DXY), which has recorded its largest plunge in years.

The historical correlation between the DXY's decline and Bitcoin's strength has been observed repeatedly over the past decade. Notably, when the DXY weakens significantly—especially when it falls below key moving averages such as the 200-day or 365-day averages—Bitcoin tends to rally or gain strength.

For instance, in 2022, when the DXY surged to a 20-year high near 114, Bitcoin's price dropped to roughly $16,000. Conversely, as the DXY weakened in late 2023, Bitcoin rebounded above $40,000. This pattern of inverse correlation has been consistent since around 2015, with the correlation coefficient between Bitcoin and DXY generally ranging from -0.4 to -0.8, indicating a moderately strong negative correlation.

Recent trends in 2025 have seen the DXY drop more than 10% year-to-date, reaching its lowest level in over three years, around 96.377. This decline has positioned the DXY well below its 200-day moving average, a phenomenon not seen in more than 20 years. During such periods, Bitcoin usually benefits as investors shift from traditional safe havens to risk assets like cryptocurrencies.

Currently, with the DXY trading significantly below its 200-day average, analysts expect Bitcoin may soon reflect this dollar weakness in a price uptrend. This prediction is further reinforced by the rising U.S. national debt and expanded dollar supply, which have contributed to diminishing the dollar’s safe-haven appeal, making Bitcoin increasingly attractive as an alternative store of value for investors.

While the bulls have structural control, indicating a tilted momentum towards the bullish side during the consolidation phase, there is still a risk of significant correction. However, some analysts believe the asset has a higher chance of surging, provided there is an increase in liquidity and demand before BTC can begin and sustain a price rally.

For those interested in exploring the crypto market, Bybit is offering a $500 free position on any coin for new registrations (limited offer for our website readers), and Binance is offering a $600 exclusive welcome offer for new accounts (also limited). These platforms could offer a starting point for those looking to capitalise on the potential upswing in Bitcoin's price.

In summary, the historical market analysis demonstrates a clear inverse correlation: when the DXY experiences sharp declines, especially below long-term moving averages, Bitcoin tends to strengthen. Past instances such as the dollar highs and lows in 2022 and 2023 illustrate this relationship, and current 2025 trends suggest a potential new upswing for Bitcoin as the dollar remains weak.

1. The current weakened state of the U.S. Dollar Index (DXY), which is trading significantly below its 200-day moving average, could lead to a price uptrend for Bitcoin, as historically, the DXY's decline has been associated with Bitcoin's strength.
2. Unlike traditional safe havens, cryptocurrencies like Bitcoin tend to benefit during periods when the DXY is weak, as investors shift their focus towards risk assets.
3. For prospective investors, platforms like Bybit and Binance could serve as a starting point to capitalize on the potential upswing in Bitcoin's price, given the historical inverse correlation between Bitcoin and the DXY.

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