Bitcoin may be entering a new phase of upward momentum as weakness in the U.S. dollar signals a potential shift in investor sentiment, according to recent on-chain analysis from CryptoQuant contributor Darkfost.
The U.S. Dollar Index (DXY)—a key benchmark of dollar strength—is currently trading 6.5 points below its 200-day moving average, marking the largest downside deviation in over 21 years.
This development is significant, as historical trends suggest a strong inverse correlation between the dollar’s performance and Bitcoin’s price action. When the dollar declines and loses its traditional safe-haven appeal, investors often reallocate funds into alternative assets such as cryptocurrencies. Analysts believe the current macro environment marked by record U.S. debt levels and falling dollar strength could once again trigger this familiar capital rotation.
Looking back, periods in which the DXY has dipped below its 365-day moving average have typically aligned with the early stages of Bitcoin bull markets. These moments of dollar weakness often coincide with growing liquidity in the financial system, creating favorable conditions for crypto assets to rally—not just due to technical setups, but because of broader shifts in investor behavior.
Despite this, Bitcoin’s price has yet to respond aggressively to the recent dollar downturn. However, analysts view this as a possible inflection point. With fiat credibility under pressure and inflation fears lingering, Bitcoin may increasingly appeal to investors seeking a hedge against currency debasement.
Adding to the cautious mood, data from Coinglass shows a slight cooling in derivatives market activity. Open interest has eased to $73.41 billion, while trading volume has dropped by about 12% to $55.3 billion indicating that traders are still hesitant to go risk-on despite the macro setup.
Nevertheless, signs of bullish momentum are emerging on the technical front. According to a June 25 analysis by CryptoQuant contributor İbrahim COŞAR, Bitcoin reclaimed its 50-day exponential moving average (EMA), a key trend indicator often associated with short-term rallies. This recovery could mark the beginning of renewed upward price action, especially if macro trends continue to support risk-on behaviour.
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