Analysis of the Dollar Index and Its Impact on Bitcoin
At the beginning of this year, research conducted by CoinDesk highlighted a fascinating trend: the Dollar Index (DXY), which measures the strength of the U.S. dollar against a basket of major currencies, appeared to be following a trajectory similar to that observed during Donald Trump’s first term in office. Historical data reveals that between September 2024 and January 2025, coinciding with Trump’s re-election campaign, the DXY index surged from 100 to 110.
In the current cycle, the index reached a peak of 110 in mid-January but has since experienced a notable decline, dropping below 105 for the first time since mid-November. Should the DXY fall to approximately 103, it would effectively wipe out all the gains accumulated since Trump’s victory in November. Generally speaking, a DXY index above 100 is deemed strong and tends to exert pressure on risk assets.
However, as the index dipped below 105, an intriguing phenomenon occurred: Bitcoin (BTC) surged past the $88,000 mark. This mirrors a pattern observed in 2017, when the DXY declined from 103 to below 90, a period that coincided with a remarkable bull run for Bitcoin that culminated in a peak of $20,000 in December of that year.
Despite the promising signs for cryptocurrency enthusiasts, macroeconomic uncertainties continue to loom large. Concerns regarding tariffs, inflation, and the overall growth of the U.S. GDP persist. Current economic indicators suggest a slowdown, with Friday’s jobs report anticipated to reveal a steady unemployment rate of 4.0%. Should the report yield weaker-than-expected results, we may witness a further decline in treasury yields, thereby increasing the likelihood that the Federal Reserve will contemplate a rate cut during its March meeting.
