Wells Fargo highlighted a potential resurgence in Bitcoin’s value as the U.S. dollar continues to slide, signaling a shift in market dynamics. The bank pointed to a strong inverse correlation between Bitcoin and the U.S. Dollar Index (DXY), which measures the greenback’s strength against six major currencies. Over the past six months, Bitcoin’s 25% decline from its 2025 highs aligned with a nearly 10% surge in the DXY during late 2024. However, the dollar has since retreated by approximately 6%, falling to a low of 103.197 by March 2025, prompting optimism for Bitcoin’s recovery.
Historically, Bitcoin has exhibited a 10-week lagging inverse correlation with the DXY, a pattern Wells Fargo believes positions the cryptocurrency for a bullish reversal. The bank noted that periods of dollar weakness often precede significant upward momentum for Bitcoin. Julien Bittel, Head of Research at Global Macro Investor, reinforced this view, citing historical precedents where similar DXY declines preceded sharp Bitcoin rallies. For example, in 2015, a 4% drop in the DXY led to Bitcoin gaining 88% within weeks.
Market analysts also tied Bitcoin’s outlook to shifting macroeconomic policies. The Trump administration’s tariff threats against the EU and China earlier fueled dollar strength as a safe-haven asset, but recent geopolitical tensions and fading trade policy impacts have contributed to dollar fatigue. Matthew Sigel, Head of Digital Assets Research at VanEck, shared Wells Fargo’s analysis, emphasizing that Bitcoin’s decline mirrored the dollar’s late-2024 rally and suggesting the cryptocurrency could rebound as the DXY softens further.
Bullish sentiment is compounded by record inflows into Bitcoin ETFs, which surpassed $33.6 billion globally in 2024. Analysts project this trend will accelerate in 2025, paralleling gold’s trajectory after its ETF launch in 2004. Nevertheless, uncertainties remain, including the U.S. Federal Reserve’s interest rate decisions and whether traditional safe-haven dynamics will hold amid evolving global economic conditions. While Wells Fargo remains cautiously optimistic, market watchers advise monitoring the DXY’s movements as a key indicator of Bitcoin’s near-term trajectory.
Sources:
Wells Fargo Predicts Bitcoin’s Bullish Turn with Dollar Weakness
https://thecryptobasic.com/2025/03/19/wells-fargo-sees-bitcoin-price-flipping-bullish-soon/
https://www.fxstreet.com/cryptocurrencies/news/bitcoin-price-annual-forecast-2025-outlook-brightens-on-expectations-of-us-pro-crypto-policy-202412191155
https://www.investing.com/news/forex-news/us-dollar-strength-expected-despite-potential-market-volatility-wells-fargo-93CH-3849749
