DXY Drops Below 200-Day MA Sparking Bitcoin Bullish Momentum
1min read The US Dollar Index (DXY) has fallen below its 200-day moving average (MA) for the first time since November, marking a significant shift in the currency’s trajectory. This decline has fueled speculation about potential bullish momentum for risk assets, including Bitcoin (BTC).
Over the past three trading days, the dxy has dropped by more than 3%, slipping below the 200-day MA for the first time in over three months. In trading, losing the support offered by the moving average generally suggests weakening momentum and is a bearish signal. This decline has sparked discussions among analysts about the potential impact on digital assets.
Lark Davis, a renowned crypto analyst, weighed in on the development. He states that the weakening dollar and an expanding global money supply are bullish for digital assets. Davis highlighted that the US government is working toward establishing a strategic Bitcoin reserve. This could further reinforce positive sentiment for Bitcoin and the crypto market. However, the analyst cautioned that short-term volatility remains a possibility despite the favorable long-term outlook.
“However, it doesn’t mean things can’t get worse before they start getting better. Patience is key here,” Davis added.
Dan Gambardello, another well-known analyst, pointed to historical patterns. He pointed to a similar DXY decline during the last cycle, which triggered a parabolic bull run in the crypto market. The analyst emphasized that the current market fundamentals are significantly stronger than in the past. If history repeats itself, he said, Bitcoin and altcoins could be poised for a substantial rally.
“Last cycle, this move triggered a parabolic bull run. This time, fundamentals are 100x stronger,” the analyst added.
Meanwhile, the weakening of the US dollar has been partially attributed to trade policies. A trader and market analyst explained that tariff strategies exert downward pressure on the DXY while forcing the hand of the Federal Reserve. “His calls for ‘more rate cuts’ didn’t move the Fed much, so he’s using tariffs as an alternative strategy,” the trader suggested.
Further, the analyst detailed how tariffs create economic uncertainty, which could slow growth and lead to the Fed cutting interest rates. Lower interest rates weaken the dollar, making US assets less attractive to investors seeking higher yields.
Technical analysts are also monitoring key levels for the D 