The US Dollar Index (DXY) has reached its lowest level in over 20 years, which, according to CryptoQuant analysts, creates favorable conditions for further growth of Bitcoin. According to their estimates, the current DXY value is 6.5 points below the 200-day moving average, marking a record negative deviation over the past 21 years.
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Impact of a Weak Dollar on the Crypto Market
Experts emphasize that similar periods in the past have often served as a catalyst for rising prices of risk assets, including Bitcoin. The decline in the dollar’s appeal as a “safe haven” encourages investors to redirect capital towards alternative financial instruments, particularly cryptocurrencies.
Special attention is drawn to historical episodes when the DXY index traded below its 365-day average. During these times, the market for the first cryptocurrency demonstrated significant growth, which analysts attribute to an increase in global liquidity, part of which is directed towards the cryptocurrency market.
“We are currently in a phase where the weakness of the DXY index could fuel new Bitcoin growth; however, the asset’s price has not yet reacted,” CryptoQuant concluded.
Current Situation and Prospects
CryptoQuant emphasizes that while historical data indicates a positive impact of a weak dollar on Bitcoin’s value, the current market price has not yet reflected this potential. Analysts advise monitoring the dynamics of global liquidity and investor behavior in light of changes in the currency market.