Key Takeaways
- The DXY Index has seen one of its largest drops in the past decade, a rare event usually associated with Bitcoin price lows.
- Historical occurrences of similar declines in 2015, 2020, and 2022 led to marked recoveries in Bitcoin prices.
The DXY Index, which gauges the strength of the U.S. dollar against major currencies, has recorded a significant decline this week. According to data from Bloomberg, the one-week percentage drop exceeded a negative four standard deviation level, an unusual occurrence that has only been noted three times before in Bitcoin’s history.
These noted events occurred in:
- November 2022 - Bitcoin reached a low of $15,500 during the FTX collapse.
- March 2020 - The price briefly sank below $5,000 amid the COVID-19 pandemic.
- 2015 - Bitcoin traded around $250 during a bearish market.
Each drop in the DXY Index that surpassed the -4 standard deviation mark coincided with a bottom for Bitcoin, which later experienced significant price spikes.
Additionally, CoinDesk research indicates that the DXY Index is declining more rapidly than during President Trump’s initial term, which was characterized by the 2017 Bitcoin bull run. A fall in the DXY Index generally benefits risk assets, though it currently stands strong at 103.8.
