Key Takeaways
- DXY fell below 100 during previous 500%+ Bitcoin rallies.
- Analysts question whether China is actively weakening the US dollar.
- A weaker dollar reduces US corporate tax revenues and raises import costs.
The US Dollar Index (DXY) is approaching the 100 mark, a level that historically coincided with major Bitcoin price surges.
In April 2017 and June 2020, when DXY dipped below 100, Bitcoin rallied by 1,367% and 508% respectively.
Current DXY status
As of early April 2025, the DXY remains around 104, still within the 100–110 range where it has fluctuated since November 2022.
Despite speculation, analysts like Jim Bianco, president of Bianco Research, argue that recent movements don’t necessarily reflect a coordinated attempt to undermine the dollar.
Bianco noted:
The DXY has remained steady around the 102 level.
He questioned whether China is indeed offloading US Treasurys in a targeted effort.
China’s influence on the dollar
However, China’s central bank has reportedly asked state-owned lenders to reduce dollar purchases, raising questions about potential pressure on the dollar.
This directive follows a Reuters report indicating that banks were told to step up scrutiny on dollar transactions, possibly in response to US tariff hikes.
Economic consequences of a weaker dollar
A weaker dollar can have broader economic consequences.
It reduces the dollar value of international revenues for US-based corporations—over 49% of income for firms like Apple, Tesla, and Meta comes from abroad—and increases the cost of imports.
The US annually imports $160 billion in oil and $255 billion in tech products.
Bitcoin as a hedge
Although Bitcoin’s current price sits near $82,000, further drops in the DXY could once again drive investors toward Bitcoin as a hedge.
