Key Takeaways
- The US Dollar Index (DXY) is trading 6.5 points below its 200-day moving average, the largest deviation in 21 years.
- Analysts at CryptoQuant reaffirm Bitcoin's traditional inverse correlation to DXY, suggesting current weakness could benefit BTC.
- Economist Lyn Alden highlights growing US debt and dollar supply as factors making Bitcoin more attractive to investors.
Recent analysis from onchain analytics firm CryptoQuant indicates that Bitcoin may stand to gain as the US Dollar Index (DXY) posts its largest 200-day moving average deviation in over two decades.
The DXY fell to 96.377 on July 1, reaching its lowest level against major trading partners since early 2022 and marking a year-to-date decline of over 10%.
CryptoQuant contributor Darkfost highlighted this development, stating in a blog post:
“While the US debt reaches a new all-time high, the DXY has just hit a historically weak level, currently trading 6.5 points below its 200-day moving average, marking the largest deviation in the past 21 years. Although this may appear alarming at first glance, it actually tends to benefit risk assets like Bitcoin.”
History of DXY vs BTC
He noted that throughout Bitcoin’s history, periods where DXY trades below its 365-day moving average have generally coincided with positive price performance for Bitcoin.
However, despite the current weakness in DXY, Bitcoin’s price has yet to react in line with historical trends.
Economist Lyn Alden, speaking to Cointelegraph, emphasized that the ongoing expansion of US debt and money supply further underscores Bitcoin’s appeal as an alternative asset.
Alden explained:
“If total credit in the system and total dollars in the system are going to keep increasing over the next five, seven, ten years, that’s one of the macro factors that makes Bitcoin useful to own.”
