U.S. Dollar Index Endures Biggest Collapse in Decades as Bitcoin’s Stochastic Hints at Sub-$100K Move: Technical Insights

Dollar Index Slump Supports Bitcoin’s Long-Term Prospects, but Short-Term Signals Hint at Dip Below $100K

The dollar index (DXY) has seen a significant drop during the first half of 2025, strengthening the long-term bullish case for bitcoin. Still, technical indicators for BTC suggest caution, pointing to a possible decline below the $100,000 level in the near term.

Tracking the U.S. dollar’s value against a basket of major global currencies, the DXY has fallen more than 10% since January, marking its steepest six-month decline since the third quarter of 1991, according to TradingView data. This sharp drop is tied to President Donald Trump’s trade disputes and his persistent calls for the Federal Reserve to lower interest rates.

The dollar’s plunge pushed the DXY beneath a critical 14-year rising trendline, with the MACD histogram on the half-year chart turning negative. The break of this long-term support, coupled with a bearish MACD reading, suggests increasing downward momentum and a heightened risk of further losses for the dollar.

“Looks like USD could drop another 10% easily… and maybe a lot more in the next 12-24 months,” said Dan Tapiero, founder and CEO of DTAP Capital, in a post on X (formerly Twitter), highlighting the dollar’s weakness as a bullish driver for bitcoin.

BTC May See Short-Term Weakness

Although bitcoin stands to benefit over the long term from the dollar’s decline, its immediate outlook appears shaky. On Monday, BTC slipped 1%, pulling back from the top edge of a bull flag consolidation that’s been forming for roughly six weeks.

Traders often analyze oscillators like the stochastic indicator to determine whether a rejection at the upper boundary of a consolidation range could signal a return toward lower levels.

Currently, bitcoin’s 14-day stochastic is flashing a similar pattern seen in early June. The indicator is nearing a drop below the 80 threshold—a move out of overbought territory that often hints at growing selling pressure and a potential slide within bitcoin’s existing trading range.

This suggests BTC could fall below $100,000 in the short run. However, if bitcoin manages to break decisively above the top of the consolidation pattern, it could invalidate this bearish scenario and set the stage for a rally toward $140,000.