Historic Dollar Index Drop Suggests Bitcoin May Have Found a Bottom
The U.S. Dollar Index (DXY) has suffered one of its largest weekly declines since 2013, a rare event that has historically aligned with major bitcoin (BTC) market bottoms.
Data from Global Macro Investor via Bloomberg reveals that the DXY’s latest one-week drop exceeded a negative four standard deviation move—an anomaly seen only three times in BTC’s history. Each of these instances marked a key inflection point for bitcoin:
- November 2022 – Bitcoin bottomed at $15,500 following the FTX collapse.
- March 2020 – BTC briefly fell below $5,000 as the COVID-19 pandemic triggered market-wide panic.
- 2015 Bear Market – Bitcoin traded near $250 before entering a sustained recovery.
Each time the dollar index experienced a similar sharp decline, BTC rebounded significantly in the months that followed.
Weakening Dollar Could Set Stage for Bitcoin Rally
CoinDesk research highlights that the DXY’s current decline is unfolding at a faster pace than during Trump’s first presidential term—a period that coincided with the 2017 crypto bull run. A weaker dollar is generally favorable for risk assets, including bitcoin.
Despite the drop, the DXY remains relatively strong above 100, currently sitting at 103.8. However, if the trend continues, bitcoin could gain further momentum, reinforcing the historical pattern of BTC rallies following extreme dollar weakness.
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