Bitcoin Eyes New Highs as U.S. Dollar Index Hits 21-Year Lows

Dollar Weakness Sparks Fresh Optimism for Bitcoin

Bitcoin is trading just shy of its all-time high as macroeconomic tailwinds—including a 21-year low in the U.S. Dollar Index (DXY)—rekindle hopes of a breakout.

According to a July 9 analysis by CryptoQuant contributor Darkfost, the U.S. Dollar Index is now 6.5 points below its 200-day moving average, the widest gap in more than two decades. Historically, this kind of dollar weakness has often provided a bullish environment for risk-on assets like Bitcoin (BTC).

DXY and Bitcoin: A Proven Inverse Relationship

Bitcoin has long shown a negative correlation with the dollar, typically ranging between -0.4 and -0.8. When the dollar strengthens, Bitcoin tends to fall—and vice versa.

• In 2022, when DXY surged to 114, Bitcoin bottomed near $16,000.

• By late 2023, as the dollar pulled back, BTC rebounded above $40,000.

With DXY continuing to decline, many analysts believe another BTC rally could be imminent—if history repeats itself.

BTC Price Update: Hovering Near Record Highs

At the time of writing:

• Bitcoin price: $108,712

• 24-hour change: +0.2%

• Distance from ATH ($111,814 on May 22): ~2.7%

Despite this bullish backdrop, trading activity has cooled:

• Spot volume: Down 18% to $21.5 billion

• Open interest (derivatives): Slight dip to $73.41 billion

• Derivatives volume: Down ~12% to $55.3 billion (per Coinglass)

This suggests investors are cautious, possibly waiting for a clearer signal before re-entering the market.

Technical Indicators: Mixed but Leaning Bullish

From a technical standpoint, Bitcoin is currently:

• Above all major moving averages – a strong bullish indicator

• RSI (Relative Strength Index): Neutral at 56, signaling no immediate overbought/oversold pressure

• MACD: Turned positive, hinting at building bullish momentum

• Momentum Indicator: Negative, suggesting hesitation

• Bollinger Bands: Widening, which may foreshadow increased volatility

Key Levels to Watch

• Resistance: $110,300

• Support: $107,100

Traders are watching these levels closely. A break above resistance could trigger a push to new highs, while a drop below support may lead to short-term weakness.

Related: US Dollar and Stocks Slide as Trump Ramps Up Pressure on Fed; Crypto Surges

Source: https://x.com/TheBtcRambo/status/1942844216440447387

Conclusion: Will History Repeat Itself?

With the U.S. dollar under pressure and Bitcoin maintaining strong technical positioning, the macro setup favors a bullish continuation. However, trading volume and derivatives activity show that the market remains in wait-and-see mode.

If dollar weakness persists and BTC breaks above $110,300, a new all-time high may be within reach. But as always in crypto, timing is everything.

Related: Bitcoin’s $110K Line in the Sand—LF Labs PoS Brings Crypto to Checkout