Dollar Index Plunge Bolsters Bitcoin’s Long-Term Outlook, but Short-Term Signals Warn of Potential Drop Below $100K

The dollar index (DXY) has tumbled sharply in the first half of 2025, offering support to bitcoin’s long-term bullish narrative. However, BTC’s near-term technical indicators are flashing caution signals, suggesting the possibility of a downturn below the $100,000 level.

The DXY, which tracks the value of the U.S. dollar against a basket of major global currencies, has slumped over 10% since January—marking its worst six-month performance since Q3 of 1991, according to TradingView data. The decline has been attributed to President Donald Trump’s ongoing trade conflicts and his repeated calls for interest rate cuts from the Federal Reserve.

This significant drop pushed the DXY below a key 14-year ascending trendline, with the MACD histogram on the half-year price chart falling into negative territory. The breach of the long-term trendline, coupled with the negative MACD reading, signals growing bearish momentum and raises the risk of further losses for the dollar.

“Looks like USD could drop another 10% easily… and maybe a lot more in the next 12-24 months,” said Dan Tapiero, founder and CEO of DTAP Capital, on X (formerly Twitter), describing the dollar’s weakness as a bullish catalyst for bitcoin.

BTC Faces Near-Term Sell-Off Risk

While bitcoin benefits from a weaker dollar over the longer term, its short-term technical outlook remains fragile. On Monday, BTC fell 1%, retreating from the upper boundary of a bull flag consolidation pattern that has been forming over the past six weeks.

Traders often look to oscillators like the stochastic indicator to determine whether a rejection at the upper edge of a consolidation pattern signals a potential slide back to lower levels.

For bitcoin, the 14-day stochastic indicator appears to confirm this risk, replicating a similar setup observed in early June. The stochastic is close to crossing below the 80 level—a move out of the overbought zone that often suggests increased selling pressure and a potential drop within bitcoin’s current trading range.

In other words, BTC could revisit prices below $100,000 in the short term. However, a decisive breakout above the upper boundary of the consolidation would negate this bearish signal and open the door for a rally toward $140,000.

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