Bitcoin may be on the edge of another bullish breakout—and this time, it's not about halving cycles or ETF flows. The catalyst? A slumping U.S. dollar.
According to data from CryptoQuant, the U.S. Dollar Index is now trading over 6.5 points below its 200-day moving average—a technical breakdown not seen in 21 years. That's notable because Bitcoin has long shared an inverse relationship with the dollar: when one falls, the other tends to rise.
The DXY touched 96.377 on July 1, its lowest point since early 2022, and has shed more than 10% year to date. On-chain analysts say this kind of dollar weakness—especially when paired with soaring U.S. debt levels—has historically signaled risk-on rotations from traditional investors. And risk-on often means Bitcoin (BTC-USD).
“While the U.S. debt reaches a new all-time high, the DXY has just hit a historically weak level,” wrote CryptoQuant contributor Darkfost, adding that this environment “tends to benefit risk assets like Bitcoin.”
But curiously, Bitcoin's price hasn't fully reacted—yet. While BTC is hovering above $111,000, analysts are watching for signs of a delayed upside response. A chart shared by CryptoQuant shows that during previous dips below the DXY's 365-day moving average, Bitcoin prices have followed with strong upward momentum.
That hasn't happened so far, but macro watchers say it might just be a matter of time. Darkfost explains that as the dollar loses its “safe haven” appeal, institutional portfolios start tilting toward alternative assets—including crypto.
Adding to that view, macro economist Lyn Alden told Cointelegraph that if the supply of dollars and systemwide credit continues expanding, Bitcoin becomes “useful to own” over the longer term—especially as fiat weakens structurally.
For now, the dollar's breakdown is a chart watchers' red flag—but for Bitcoin bulls, it may be a green light.
