Dollar Index Falls Below 105 as Bitcoin Surpasses $90K
The DXY index has decreased to its lowest point since mid-November.
What to know:
- The DXY index, a measure of the U.S. dollar’s strength, has dropped below 105 for the first time since mid-November.
- The DXY index continues to mirror President Trump’s first election cycle.
- Bitcoin rose above $88,000.
At the beginning of the year, CoinDesk research indicated that the Dollar index (DXY) reflecting the U.S. dollar’s strength against other major currencies has been following a pattern similar to that during Donald Trump’s first term in office.
Between September 2024 and January 2025, matching Trump’s re-election, the DXY index surged from 100 to 110. Currently, the index peaked at 110 in mid-January but has recently fallen below 105 for the first time since mid-November. If it goes down to around 103, it would negate all its gains made since Trump’s victory in November.
Typically, a DXY index that exceeds 100 is considered strong, which generally puts pressure on risk assets. However, as the index has dipped below 105, Bitcoin has shown significant growth, surpassing the $88,000 mark.
A comparable occurrence was seen in 2017, where the DXY fell from 103 to below 90, coinciding with Bitcoin’s bullish phase that ultimately peaked at $20,000 in December.
Even with these market activities, macroeconomic uncertainties remain, raising apprehensions related to tariffs, inflation, and the growth of U.S GDP. The economic outlook seems to be slowing, and the upcoming jobs report is anticipated to sustain the unemployment rate at 4.0%.
If this report is weaker than expected, treasury yields might continue to decrease, which could enhance the likelihood that the Federal Reserve will consider lowering rates at its March meeting.
