Bitcoin Price Predictions Linked to US Dollar Index Declines: Analyst Insights
Bitcoin’s recent price struggles are examined alongside declines in the US Dollar Index (DXY). Analysts suggest that DXY dips may lead to substantial increases in Bitcoin prices based on historical trends. With rising wallet activity and technical setups indicating potential future gains, there remains a cautiously optimistic outlook for Bitcoin in the coming months.
Bitcoin has encountered difficulties sustaining its price above $90,000 after recently dropping below $95,000 on February 24. Over the past week, Bitcoin (BTC) has experienced significant volatility, reaching the highest level of realized volatility since the third quarter of 2024, as reported by Glassnode. With upcoming price movements anticipated ahead of the inaugural US crypto summit at the White House, analysts are also examining the implications of the declining US Dollar Index (DXY) on Bitcoin’s price trajectory.
James Coutts, chief crypto analyst at Real Vision, conducted an in-depth analysis of the correlation between declines in the US Dollar Index and Bitcoin performance. Citing a notable drop in the DXY constituting its fourth-largest three-day decline in history, Coutts suggested that this scenario could initiate a resurgence in Bitcoin prices. Reviewing historical data from 2013, he assessed the relationship between significant DXY dips and Bitcoin price movements, revealing the following outcomes:
When the DXY declines by 2.5% or more, Bitcoin’s price has historically increased 100% of the time. The potential scenarios are: a best-case projection of a 65% rise, culminating in a Bitcoin price of $143,000; a base-case anticipation of a 37% increase, equating to $123,000; and a worst-case outcome of a 14% gain, bringing the price to $102,000. Conversely, when the DXY falls by 2% or more, Bitcoin has advanced 94% of the time (17 out of 18 instances) over 90 days, with corresponding price movements of: a best-case increase of 57.8% to $141,000; a base-case average return of 31.6% to $118,000; and a worst-case decline of 14.6% to $76,500.
Given a 3% decrease in DXY between March 3 and March 6, Coutts made a assertive prediction for new all-time highs (ATH) by May 2025. Similarly, Julien Bittel, head of macro research at Global Macro Investor, also noted a plausible upward trend for Bitcoin linked to the DXY decline and stated, “1) Financial conditions lead risk assets by a couple of months. 2) Right now, financial conditions are easing – and fast…”
In a related context, Santiment, a data analytics platform, indicated that over 50,000 new wallets had been created on the network within the past month. This indicates ongoing positive sentiment among investors, with 37,390 wallets holding less than 0.1 BTC, 12,754 wallets containing between 0.1-100 BTC, and six whale wallets housing at least 100 BTC.
Technically, crypto investor Jelle expressed that Bitcoin’s “Power of Three” setup remained intact, suggesting a significant retraction towards $91,200. He remarked, “Once it does – the power of three setups comes into play; with a target of $140,000.” It is imperative for readers to note that this article does not constitute investment advice, and all trading activities entail risk, necessitating thorough personal research before decisions are made.
In summary, Bitcoin’s current price struggles are juxtaposed with significant movements in the US Dollar Index, suggesting potential future gains. Analysts, including James Coutts and Julien Bittel, forecast a positive correlation between DXY declines and Bitcoin price increases, citing historical data that indicates high probabilities of price rises in line with DXY fluctuations. Additionally, increasing investor activity signals long-term optimism. As Bitcoin approaches critical technical levels, the implications are significant for potential market shifts.
Original Source: cointelegraph.com
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