The US Dollar Index (DXY), which measures the dollar’s value against a basket of foreign currencies, has dropped to a three-year low. The decline contrasts with gold’s performance, which hit an all-time high of $3,220 amid rising trade war tensions.
Yet, DXY’s dip has sparked optimism among cryptocurrency investors. Many see the weakening dollar as a bullish signal for Bitcoin (BTC), which has recently shown signs of modest recovery.
Will Bitcoin Rally Following the DXY Index’s Fall?
Data shows that the DXY index dropped by 1.5% in the last 24 hours. As of press time, it stood at 99.4, marking its lowest level since April 2022. The decline is part of a broader trend in 2025, with the DXY down 8.3% since January.
“The US dollar index dropped to its lowest level in nearly three years amid capital outflows from American assets. Escalating trade tensions and growing concerns over broader economic fallout, particularly for the US, have weighed heavily on market sentiment,” CryptoQuant’s Alex Adler told BeInCrypto.
Notably, the index’s fall below 100 marks a critical threshold. Historical data highlights a strong correlation between a declining DXY and substantial Bitcoin price surges.
The last two times the DXY fell below the 100 mark—in April 2017 and May 2020—Bitcoin experienced significant, months-long rallies. These substantial increases have led to speculation that history could repeat itself. If it does, Bitcoin could potentially be poised for another major surge.
Interestingly, Bitcoin has already shown signs of recovery after the 90-day tariff pause. The largest cryptocurrency reclaimed the $80,000 level, signaling renewed investor confidence. According to BeInCrypto data, Bitcoin appreciated by 0.8% over the past 24 hours. This reflected minor but positive gains that suggest momentum could be building.
In fact, the market watchers on X (formerly Twitter) share a similar outlook.
“Weak dollar is going to be a surprising tailwind for emerging markets this year that wasn’t on anyone’s bingo card,” a user wrote.
Meanwhile, an analyst observed that the US dollar’s decline has occurred despite the Federal Reserve’s failure to reduce interest rates or implement quantitative easing (QE).
“Traditionally, DXY going down is very bullish for BTC,” he said.
The analyst also highlighted a notable bearish divergence on the charts. Thus, he predicted that the dollar could potentially drop to 90, signaling a further decline in its value.
Similarly, another analyst described DXY’s decline as “one of the best anticipated macro moves ahead.”
“Each time this has happened in the past, it resulted in a massive bull market for Bitcoin, Crypto, and stocks,” Jackis remarked.
He also acknowledged that the markets have been slow to react, attributing this delay to a lag of more than three months. Additionally, he noted that the ongoing bond situation between China and the US, driven by escalating trade tensions, is contributing to this slow reaction.
Yet, he believes this situation will either be resolved through a deal between the two countries or the Federal Reserve will intervene by buying long-term bonds to stabilize the market. Now, the coming weeks will be crucial to determine whether Bitcoin will actually enter another bull run or falter under geopolitical tensions and broader market shifts.
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