US Dollar Falls: Good News for Crypto?
The US Dollar Index (DXY) has been going down lately, and people in the crypto world are excited! Raoul Pal, a famous financial expert, thinks this could mean a great quarter for cryptocurrencies. Let’s find out why a falling dollar can be good for crypto.
What’s the US Dollar Index (DXY)?
The DXY is like a report card for the US dollar. It shows how strong the dollar is compared to other big currencies like the euro, Japanese yen, and British pound. When the DXY goes down, it means the dollar is getting weaker compared to these other currencies.
Why Does a Falling DXY Help Crypto?
In the past, when the dollar was strong, crypto prices usually went down. But when the dollar gets weaker, people often buy crypto instead. This is because crypto is seen as a safe place to put your money when the dollar is losing its value. So, a falling DXY can lead to higher crypto prices[1][5].
What’s Happening in the Market?
In early 2025, the DXY started to drop. On February 14, it fell by 0.5% to 97.23[1]. At the same time, the prices of Bitcoin (BTC) and Ethereum (ETH) went up. Bitcoin rose by 2.02% to $43,000, and Ethereum increased by 1.79% to $2,850[1]. The number of trades for both BTC and ETH also grew a lot, with BTC’s volume up by 15% and ETH’s by 12%[1].
Not only that, but altcoins also did well when the dollar was weak. On March 4, 2025, when the DXY fell to 95.23, altcoins like Ethereum, Cardano (ADA), and Solana (SOL) got more expensive. Ethereum went up by 3.2%, Cardano by 4.1%, and Solana by 5.6%[3].
What Do the Numbers Say?
Technical indicators for big cryptocurrencies show that people are buying a lot right now. For example, the Relative Strength Index (RSI) for Bitcoin is at 65, which means there’s strong buying pressure but it’s not too much[1]. The Moving Average Convergence Divergence (MACD) for Bitcoin also shows that the price is going up[1]. On-chain metrics, like the number of active Bitcoin addresses and the hash rate, are also looking good[1].
What’s Next?
The falling DXY has been good for crypto in the past, so some people think this time could be the same. But remember, the market can change quickly, so it’s important to stay alert.
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