The DXY Index

The DXY Index has experienced one of its sharpest one-week declines since 2013. This index measures the strength of the U.S. dollar against a basket of major currencies.

According to Bloomberg data from Global Macro Investor, the index’s one-week percentage drop has exceeded a negative four standard deviation move—a rare event that has only occurred three other times in Bitcoin’s (BTC) history.

These previous occurrences include:
– November 2022: Bitcoin hit its cycle low of $15,500 during the FTX collapse.
– March 2020: Amid the COVID-19 pandemic, Bitcoin briefly fell below $5,000.
– 2015 Bear Market: Bitcoin traded around $250.

Each time the DXY Index suffered a drop larger than -4 standard deviations, it coincided with a Bitcoin bottom, followed by significant price gains.

Additionally, CoinDesk research highlights that the DXY Index is currently declining at a faster rate than during President Trump’s first term—a period that aligned with the 2017 Bitcoin bull run. A decline in the DXY Index tends to be favorable for risk assets; however, a DXY Index above 100 is still considered strong, currently at 103.8.

DXY 1-Week % Change
(LSEG Datastream, Bloomberg, Global Macro Investor)