Wells Fargo analysts have identified a potential bullish turnaround for Bitcoin, linking it to the ongoing decline of the U.S. dollar. The bank’s research highlights a historical inverse relationship between Bitcoin and the U.S. Dollar Index (DXY), which measures the greenback’s value against a basket of foreign currencies. Over the past decade, Bitcoin has consistently tracked the inverted DXY with a 10-week lag, suggesting the current market dip may reverse as the dollar weakens.
The DXY surged nearly 10% in late 2024, peaking at 110.176 in January 2025, coinciding with Bitcoin’s 25% price correction from its recent highs. Since mid-January, however, the dollar index has fallen over 6% to 103.197, creating conditions that could propel Bitcoin upward. Analysts note that Bitcoin’s recent stabilization around $82,500 and subsequent climb above $85,000 aligns with this pattern. Market observers now watch for a sustained breakout above the $86,000 resistance level, which could pave the way for rallies toward $90,000.
Wells Fargo’s Christopher Harvey emphasized that Bitcoin’s 10-week lagging correlation implies delayed reactions to dollar movements. Recent dollar weakness, driven partly by geopolitical tensions under the Trump administration and softer Federal Reserve rate-cut expectations, may signal renewed investor appetite for risk assets. VanEck’s Matt Sigel echoed this view, citing Bitcoin’s historical rebound phases after DXY pullbacks.
Despite optimistic indicators, uncertainties loom. Federal Reserve monetary policy decisions and inflation trends remain critical to dollar valuation, with potential tariff expansions or accelerated rate cuts posing volatility risks. BlackRock’s Robbie Mitchnick added that institutional adoption, exemplified by firms like JPMorgan and Barclays accumulating Bitcoin ETFs, hasn’t yet fully reflected in prices, hinting at future upside.
Bitcoin recently reclaimed $85,000 amid broader market rallies, though analysts caution that macroeconomic shifts could disrupt momentum. While the dollar’s trajectory remains pivotal, Wells Fargo’s analysis underscores a cautiously bullish outlook for Bitcoin as global liquidity conditions evolve.
Sources:
https://www.tronweekly.com/wells-fargo-btc-to-reverse-fall-dollar-slide/
https://thecryptobasic.com/2025/03/19/wells-fargo-sees-bitcoin-price-flipping-bullish-soon/
https://www.mitrade.com/insights/news/live-news/article-3-698138-20250314
