Wells Fargo analysts highlight a notable correlation between Bitcoin’s price trajectory and fluctuations in the U.S. Dollar Index (DXY), pointing to signs of a potential bullish shift for the cryptocurrency. According to the bank’s research, Bitcoin has demonstrated a strong inverse relationship with the DXY—a measure of the dollar’s strength against six major currencies—with a 10-week lag. This pattern suggests that Bitcoin’s recent slump, which saw its price drop 25% from early 2025 highs, was partly a delayed reaction to the dollar’s surge in late 2024. Between September 30 and January 13, the DXY climbed nearly 10%, peaking at 110.176 before declining over 6% to 103.197 in subsequent months. Analysts argue this dollar retreat could pave the way for Bitcoin’s recovery.
Supporting this outlook, Julien Bittel, Head of Research at Global Macro Investor, noted that similar DXY drops historically preceded significant Bitcoin rallies. Real Vision Chief Crypto Analyst Jamie Coutts echoed this sentiment, citing a 94% win rate for Bitcoin price gains within 90 days after the DXY drops more than 2%. Coutts projects a new all-time high for Bitcoin by May 2025, fueled by declining dollar strength and growing institutional adoption. Recent Federal Reserve policy shifts further bolster this narrative, as the central bank eased its balance sheet reduction program, triggering a dollar decline and a 5% surge in Bitcoin’s price past $86,800.
Market observers also highlight broader macroeconomic factors, including the Fed’s dovish signals and the People’s Bank of China’s liquidity measures, as catalysts for risk assets like Bitcoin. However, uncertainties remain, with inflation concerns and geopolitical risks lingering in the background. Wells Fargo’s analysis aligns with broader institutional interest; the bank and JPMorgan recently disclosed holdings in spot Bitcoin ETFs, reflecting growing confidence in crypto markets despite short-term volatility.
Sources:
https://thecryptobasic.com/2025/03/19/wells-fargo-sees-bitcoin-price-flipping-bullish-soon/
https://www.bitget.com/news/detail/12560604622172
https://crypto.news/us-dollar-index-positive-btc-price-all-time-high-2025-2/
https://www.ainvest.com/news/bitcoin-surges-5-fed-eases-policy-dollar-declines-2503/
