Dollar Index Drops to Lowest Level Since November as Bitcoin Surges
The U.S. Dollar Index (DXY) has fallen below 105, marking its lowest point since mid-November.
At the beginning of the year, CoinDesk research suggested that the DXY was following a similar trajectory to its movement during Donald Trump’s first presidential term. Between September 2024 and January 2025, coinciding with Trump’s re-election, the index climbed from 100 to a peak of 110. However, since mid-January, it has steadily declined, dipping below 105 for the first time in months. If the index continues to slide to around 103, it would erase all gains made since Trump’s November victory.
Historically, a DXY level above 100 signals dollar strength, often exerting downward pressure on risk assets. However, as the index weakened, Bitcoin (BTC) surged past $88,000, continuing its upward momentum.
A similar trend occurred in 2017 when the DXY fell from 103 to below 90, coinciding with Bitcoin’s historic bull run that saw the cryptocurrency reach $20,000 by December of that year.
Despite these movements, macroeconomic uncertainty remains high, with ongoing concerns about tariffs, inflation, and slowing U.S. GDP growth. The labor market also faces scrutiny, with Friday’s jobs report expected to confirm an unemployment rate of 4.0%.
If the report underperforms expectations, treasury yields may continue to decline, potentially increasing the chances of a Federal Reserve rate cut at its upcoming March meeting.
