Bitcoin poised for all-time high amid DXY three-year low
Bitcoin set to benefit as U.S. Dollar Index hits 3-Year low
As U.S. national debt reached a new all-time high, the U.S. Dollar Index (DXY) fell to a three-year low and is now trading 6.5 points below its 200-day moving average. Historically, such movements have been favorable for Bitcoin, which has shown a strong inverse correlation with DXY throughout its existence.
According to Cointelegraph Markets Pro and TradingView, on July 1, the DXY dropped to 96.377 — a level not seen in over three years — with the dollar's strength declining more than 10% year-to-date.
But the outlook is even more striking: CryptoQuant reports that DXY is now in a technical zone relative to its 200-day moving average that hasn’t been visited in over two decades.
US Dollar Index (DXY) 1-week chart with 200-day MA. Source: Cointelegraph/TradingView
Bitcoin has typically benefited from a weak dollar, even though the correlation has weakened slightly in recent years. Still, risk-on assets generally thrive when fiat currencies underperform.
“If the dollar is strong, that justifies holding it,” said economist Lyn Alden in an interview with Cointelegraph last week, referring to Bitcoin's “main competitor.”
“But if total credit and total dollar supply continue to expand over the next five, seven, ten years, that becomes a macro factor in favor of owning Bitcoin,” she added.
Darkfost, a crypto analyst, echoed this view:
“As the dollar weakens and loses appeal as a safe-haven asset, investors are rebalancing their portfolios toward alternative asset classes.”
Confirmation of the theory already now
His chart highlights periods when the DXY trades below its 365-day moving average — historically bullish phases for BTC.
“We are now in a stage where DXY weakness could spark a fresh BTC rally, but the price has yet to react,” Darkfost concluded.
At the time of writing, Bitcoin had surpassed the $110,000 mark and was trading around $111,800 — just $200 short of reaching a new all-time high.
As we wrote, Bitcoin news: BTC price trades flat as 6-day range compression hints at breakout
