US Dollar Index (DXY) falls near the level followed by 500%+ Bitcoin Price Rallies

Dollar Index (DXY) that sinks below 100 has a history aligned with Bitcoin (Btc) Running the Bull, delivering the acquisitions of over 500% in the last two instances. Now, as trading tensions are rising and Treasurys are facing sellers, some analysts believe that China may be actively working to soften the US dollar. It added pressure to the dollar increases the likelihood that it can re -serve as a catalyst for another major bitcoin rally.
Does China work to soften the US dollar?
According to the April 9 Reuters report, China’s Central Bank has taught State lenders to “reduce dollar purchases” while yuan faces significant downward pressure. Large banks have been reported to be “said to step up checks when making dollars purchase orders for their clients,” signal an effort to “hinder the speculation -aware trading.”
Some analysts have wondered if China could attempt to weaken the dollar in response to recent US import tariffs. However, Jim Bianco, president of Bianco Research, has a different perspective.
Source: X/Jim Bianco
Bianco doubts that China is selling US treasurys with the aim of harming the US economy. He points out that DXY has remained stable around 102 levels. While China can sell bonds without converting the proceeds to other currencies – thus affecting the bond market without preventing the dollar – this method does not seem productive. According to Bianco, it is unlikely that China is a significant Treasurys seller, if it sells everything.
US Dollar Index (DXY). Source: TradingView / Cointelegraph
The DXY Index remains close to 104 levels visible on March 9 and has remained within a range of 100-110 since November 2022. Therefore, claiming that its current level reflects the extensive distrust of the US dollar or signal of an imminent collapse seems without basis. In fact, stock market performance is not an accurate measure of understanding the risk of investors about the economy.
DXY below 100 is usually followed by Bitcoin Bull Runs
The last time the DXY index fell below 100 was in June 2020, a period that compatible with a Bitcoin Bull Run. For nine months, Bitcoin rose from $ 9,450 to $ 57,490. Similarly, when the DXY dropped below 100 in mid-April 2017, the price of bitcoin was skyrock from $ 1,200 to $ 17,610 in eight months. At the same time or not, the 100 levels have a history aligned with significant bitcoin prices.
A weak DXY suggests that the US dollar has lost value against a basket of major currencies such as Euro, Swiss Franc, British Pound, and Japanese Yen. This refusal affects US -based companies by reducing the volume of dollars they earn from foreign revenues, which lowers tax contributions to the US government. This issue is particularly critical to provide that the US runs an annual shortage of over $ 1.8 trillion.
Similarly, US imports for individuals and businesses become more expensive in terms of dollars when money is weakened, even though prices remain unchanged with foreign currencies. Despite being the world’s largest economy, the US has imported $ 160 billion in oil, $ 215 billion in passenger vehicles, and $ 255 billion on computers, smartphones, data servers, and similar products earlier.
Related: China’s tariff response may mean more flight flights to crypto: hayes
A weaker US dollar has two negative economic impacts. This tends to slow consumption because imports are becoming more expensive, and simultaneously reducing tax revenues from the international revenues of US-based companies. For example, more than 49% of revenues for major corporations such as Microsoft, Apple, Tesla, Visa, and Meta come from outside the US. Similarly, companies like Google and Nvidia have gained approximately 35% or more of their worldwide revenues.
The price of bitcoin can potentially recover the $ 82,000 level regardless of the movements in the DXY index. This may happen as investors remember about Potential injections of liquidity From the US Federal Reserve to abstain from a Upside down economy. However, if the DXY index drops below 100, investors can find stronger incentives to turn to alternative fence instruments such as Bitcoin.
This article is for general information purposes and is not intended to be and should not be done as legal or investment advice. The views, attitudes, and opinions expressed here are unique and do not necessarily reflect or represent the views and opinions of the cointelegraph.