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Dollar Index Declines Below 105 as Bitcoin Hits $90K
The DXY index has now dropped to its lowest level since mid-November.
Updated Mar 5, 2025, 5:32 p.m. Published Mar 5, 2025, 9:40 a.m.
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 start of the year, CoinDesk research indicated that the Dollar index (DXY) a measure of the U.S. dollar’s strength against a basket of major trading partners was mirroring its trajectory from Donald Trump’s first term as president.
Between September 2024 and January 2025, coinciding with Trump’s re-election, the DXY index climbed from 100 to 110. This current cycle, the index peaked at 110 in mid-January but has since dropped below 105 for the first time since mid-November. If the DXY were to fall to around 103, it would erase all its gains since Trump's victory in November.
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Typically, a DXY index above 100 is considered strong, which tends to put pressure on risk assets. However, as the index dipped below 105, bitcoin rose above $88,000.
A similar pattern was observed in 2017 when the DXY fell from 103 to below 90, coinciding with bitcoin’s bull run that year, that saw it top out at $20,000 in December.
Despite this, macroeconomic uncertainty persists, with concerns surrounding tariffs, inflation, and U.S. GDP growth. The economy appears to be slowing, and Friday’s jobs report is expected to show a continuation of 4.0% unemployment rate.
If the report comes in weaker than anticipated, treasury yields could continue declining, increasing the likelihood that the Federal Reserve could consider a rate cut in its March meeting.
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Japan’s Higher Rates Puts Bitcoin in the Crosshairs of a Yen Carry Unwind
A stronger yen typically coincides with de-risking across macro portfolios, and that dynamic could tighten liquidity conditions that recently helped bitcoin rebound from November’s lows.
What to know:
- The Bank of Japan is expected to raise interest rates to 0.75% at its December meeting, the highest since 1995, affecting global markets including cryptocurrencies.
- A stronger yen could lead to de-risking in macro portfolios, impacting liquidity conditions that have supported bitcoin's recent recovery.
- Governor Kazuo Ueda indicated a high probability of a rate hike, with officials prepared for further tightening if their economic outlook supports it.
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