Dollar Index Near Key Level That Previously Ignited Bitcoin Rallies

Bitcoin (BTC) traders may want to keep a close eye on the U.S. dollar, as previous breakdowns in the Dollar Index have coincided with some of Bitcoin’s most explosive rallies.

Indeed, the U.S. Dollar Index (DXY) is now hovering near 97, and markets are approaching a level that has mattered before, according to the observations shared by renowned cryptocurrency trading expert Matthew Hyland in an X post on January 25.

Why This Level Matters for Bitcoin

Specifically, Hyland has highlighted a striking historical pattern tied to the DXY. 

The last two times, DXY decisively broke below 96, Bitcoin entered powerful bull runs. In 2017, Bitcoin surged from roughly $2,000 to $20,000 within six months. In 2020-2021, it climbed from about $10,000 to $64,000 over nine months.

In both cases, sustained dollar weakness coincided with expanding global liquidity and rising appetite for risk assets. Today, DXY sits near 97, just above that historically significant zone.

How Dollar Strength Shapes Bitcoin Cycles

Bitcoin has long shown sensitivity to dollar liquidity conditions. A strong dollar often tightens global financial conditions, pressuring speculative and risk-sensitive assets. Conversely, when the dollar weakens, capital tends to flow toward alternatives like equities, commodities, and crypto.

Hyland’s earlier analysis flagged 96 as a key inflection level, where previous dollar breakdowns aligned with shifts in macro momentum. Though correlation doesn’t guarantee repetition, the level has repeatedly acted as a trigger point for broader market repricing.

What This Means for Bitcoin’s Outlook

Meanwhile, BTC is trading at $87,852.43, recording a 0.1% gain on the day, declining 3.5% across the week, and advancing 0.1% on its monthly chart, according to the most recent price information.

A move below 96 would not automatically ignite another parabolic Bitcoin rally, but history suggests it would greatly change the macro backdrop. 

If the dollar continues to soften, Bitcoin could benefit from improving liquidity conditions and renewed risk appetite. If DXY holds firm or rebounds, crypto markets may remain range-bound.

For now, Bitcoin appears to be waiting on the USD’s next move.

Bitcoin Price Today

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