Dollar Index Sinks To Decades-Low — What It Mean For Crypto Prices?

In the first half of 2025, the U.S. Dollar Index (DXY) dropped nearly 10% — its worst six-month slump in almost 40 years — bottoming near 98.6 by June 12 .

This drop reflects easing inflation, steady Federal Reserve policy, and ongoing geo-political unrest in the middle east.

The DXY slid to roughly 98.6 – its lowest level since March 2022 – putting it more than 9% below its January opening.

According to Barchart, this is the steepest first-half drop since 1986. The dollar’s slump reflects several factors: softer inflation, strong Fed rate-cut expectations, and political uncertainty.

The dollar slide comes amid a pause in inflation and a hold on interest rates. May’s consumer price index rose 2.4% year-over-year, slightly below expectations.

The Fed, holding its benchmark rate steady at 4.25–4.50% on June 11, cited moderate inflation and global risks . With no rate hike expected, the dollar’s yield edge diminished — weakening its appeal to investors.

Analysts point also to geopolitical pressure. U.S. trade policies and de-dollarization talks have dented confidence in the dollar . As one Reuters commentary noted, the dollar’s fall echoes 1986 terms, its last major slide .

When the DXY has traded above 100, markets have often been risk-off, weighing on equities and crypto prices; the recent slide below 98 is triggering the opposite reaction.

A weakening dollar eases financial conditions, boosts global liquidity, and tends to benefit risk assets. Indeed, the dollar’s fall could create a favorable environment for risk assets, especially cryptocurrencies like Bitcoin.

In practical terms, crypto traders are seeing renewed upside: Bitcoin is hovering around $106,000 today, and Ethereum near $2,554.

The total crypto market capitalization stands roughly $3.4 trillion, per CoinGecko, after strong year-to-date gains across major coins.

Crypto Market Prices Gain on Weaker Dollar

Crypto markets have rallied amid the dollar’s decline. Bitcoin, the largest digital asset, has climbed alongside a broader risk-on rebound.

At the time of writing, Bitcoin was changing hands roughly around $106,000, up from about $95,000 at the start of the year, and Ether was around $2,554.

The crypto market cap has swelled into the multi-trillion range. CoinGecko reports $3.4 trillion total market cap as of June 2. These gains parallel the decline of the dollar: when the DXY slid below 98, Bitcoin firmed above its recent $100K support.

Analysts explains that a weak dollar effectively eases global liquidity – funds flow out of cash and into stocks, commodities and crypto.

In practical terms, many crypto traders are betting that a weaker greenback will lift Bitcoin’s appeal. As one trader quipped on social media, “Dollar is down, Bitcoin is up,” echoing widely seen charts of the inverse correlation.

Bitcoin’s on-balance volume (OBV) – a measure of buying pressure – has rose steadily even as price consolidates. Analysts have noted a classic bull-flag pattern in BTC’s chart and forecast a breakout.

A confirmed bull flag breakout could send Bitcoin toward $130,000–$135,000 by Q3 2025. Galaxy Digital CEO Mike Novogratz, who expects Bitcoin to reach $130K–150K in the coming months, driven by institutional flows and a weaker dollar.

In Novogratz’s view, the dollar’s fall removes a headwind for crypto prices, allowing capital to pour in. Ether has similarly benefited, buoyed by continued institutional investment and its own catalysts such as protocol upgrades.

Other top altcoins like Solana, Ripple and Cardano have also seen solid gains in June, aligning with the risk-on mood.

Even Bitcoin’s stablecoin trading volume has ticked up, reflecting higher market activity. Overall, most major cryptocurrencies are trading comfortably above their early-year levels.