Weak US Dollar: Good News for Cryptocurrencies?
The US Dollar Index (DXY) has been going down lately, and this has made many people in the cryptocurrency world happy. Raoul Pal, a famous financial expert, thinks this could mean a great quarter for cryptocurrencies. Let’s find out why a falling DXY is good for crypto.
What is the US Dollar Index (DXY)?
The DXY is a way to measure how strong the US dollar is compared to other major currencies like the euro, Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc[5]. When the DXY goes down, it means the US dollar is getting weaker compared to these other currencies.
Why is a Falling DXY Good for Cryptocurrencies?
In the past, when the US dollar got weaker, cryptocurrencies like Bitcoin and Ethereum often did better. This is because investors look for other places to put their money when the dollar is weak. Cryptocurrencies are seen as a way to protect against inflation and economic instability, which can happen when the dollar is weak[5]. So, when the DXY falls, people might buy more cryptocurrencies, making their prices go up.
What’s Been Happening in the Market?
In early 2025, the DXY went down, and this was good news for cryptocurrencies. On February 14, the DXY fell by 0.5% to 97.23[1]. At the same time, Bitcoin (BTC) and Ethereum (ETH) prices went up. Bitcoin rose by 2.02% to $43,000, and Ethereum increased by 1.79% to $2,850[1]. The number of trades for both BTC and ETH also went up, with BTC’s volume increasing by 15% and ETH’s by 12%[1].
Altcoins, which are other cryptocurrencies besides Bitcoin, also did well. On March 4, 2025, when the DXY fell to 95.23, Ethereum, Cardano (ADA), and Solana (SOL) prices went up[3]. Ethereum rose by 3.2%, Cardano by 4.1%, and Solana by 5.6%[3].
What Do Technical Indicators Say?
Technical indicators for major cryptocurrencies show that people are buying more of them. For example, the Relative Strength Index (RSI) for Bitcoin was at 65, which means there’s strong buying pressure but it’s not too much[1]. The Moving Average Convergence Divergence (MACD) for Bitcoin also shows that the price is going up[1]. On-chain metrics, like the number of active Bitcoin addresses and the hash rate, also suggest that people are confident in the network[1].
What Does This Mean for the Future?
The fall in the US Dollar Index has usually been a good sign for cryptocurrencies. When the dollar is weak, investors might put their money into cryptocurrencies like Bitcoin and altcoins, making their prices go up. However, the market can change quickly, so investors should be careful.
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