Bitcoin bulls eye possible tailwind as U.S. dollar index continues to leg lower
TL;DR
The U.S. dollar index is near a critical long-term support level from 2008. While other hard assets like gold have rallied on dollar weakness, bitcoin remains under pressure. A break below this support could potentially reverse crypto's downtrend.
Key Takeaways
- •The U.S. dollar index (DXY) is trading near three-month lows just above major support dating back to 2008.
- •Precious metals and other hard assets have rallied strongly on dollar weakness, but bitcoin and crypto markets have remained under pressure.
- •Diverging monetary policies between the Fed and foreign central banks could push the dollar below its long-term support level.
- •A break below the 2008 support level might finally spur a reversal in crypto's downtrend despite previous dollar weakness having little effect.
- •2025 saw structural progress in crypto ecosystems but stagnant token prices, creating a decoupling between network usage and performance.
What to know:
- The U.S. dollar is trading near a three-month low and just above a major support line stretching back to the 2008 financial crisis.
- Precious metals and other hard assets have responded as expected to the greenback's weakness — rallying strongly — but bitcoin and crypto have remained under pressure.
- The U.S. dollar is trading near a three-month low and just above a major support line stretching back to the 2008 financial crisis.
- Precious metals and other hard assets have responded as expected to the greenback's weakness — rallying strongly — but bitcoin and crypto have remained under pressure.
The U.S. dollar index (DXY) index is lower again on Tuesday, trading not far above its 2025 low.
After a strong gain in the weeks following the November 2024 election of Donald Trump, the greenback declined sharply throughout the first half of 2025 and has remained in a choppy pattern near multi-year low levels for the past few months.
The dollar's large 2025 drop initially was mostly accompanied by expected broader market reaction, with things like stocks, gold and bitcoin BTC$87,639.60 all rising sharply to new records.
The story since October, though, is somewhat different — stocks and other hard assets have continued to surge — in fact, gold, silver and copper all rose sharply again on Tuesday to reach new record highs — but bitcoin and broader crypto markets have endured brutal bear moves.
What might be next for the dollar
The DXY index is now trading just above a major long-term support level that extends back to the 2008 global financial crisis. This level has been tested and held multiple times, most recently in July and September of this year.
As several foreign central banks, including the Bank of Japan, move toward tighter monetary policy, the U.S. Federal Reserve is facing growing pressure, most notably from President Trump, to lower interest rates. This divergence raises the possibility that the dollar could fall below that major support.
While the weak dollar this year hasn't yet had any salutary effect on bitcoin, perhaps a break of that long-term support could be the news that finally spurs a reversal of crypto's downtrend.
2025 was defined by a stark divergence: structural progress collided with stagnant price action. Institutional milestones were reached and TVL increased across most major ecosystems, yet the majority of large-cap Layer-1 tokens finished the year with negative or flat returns.
This report analyzes the structural decoupling between network usage and token performance. We examine 10 major blockchain ecosystems, exploring protocol versus application revenues, key ecosystem narratives, mechanics driving institutional adoption, and the trends to watch as we head into 2026.
- Bitcoin was lower by a bit more than 1% to just below $88,000 on Tuesday.
- Crypto-related stocks were suffering far larger declines.
- Analysts suggest tax-loss harvesting and low liquidity are contributing to the action in crypto markets as the year ends.
- Some analysts remain cautiously optimistic about a potential rally, though significant recovery is not expected until liquidity returns in January.
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