DXY Experiences Worst Performance in Eight Years – So Why Isn’t Bitcoin Rising?

Dollar's Worst Performance

The cryptocurrency market currently finds itself at a critical junction. A closer look reveals that the decline of the U.S. dollar is indicative of waning investor confidence, which is being influenced by increasing national debt and ongoing uncertainties surrounding tariffs. These factors are diminishing the dollar's yield advantage.

Data confirms this trend, showing that the DXY index dropped 9.4% in 2025, marking its most disappointing performance in the last eight years. The downturn has continued into 2026, with the index down an additional 2.23% thus far, suggesting a continuing loss in yield support.

Historically, situations like these have favored Bitcoin (BTC). For instance, in 2017, when the DXY fell below 96, Bitcoin experienced a massive rally, surging nearly 800%. A similar occurrence in 2020, which was fueled by liquidity boosts, led to BTC rising about 700% in the following months.

DXY

Source: TradingView (DXY/BTC)

This brings us to a pivotal question: Will history repeat itself?

U.S. President Donald Trump views a weaker dollar as a positive development. He contends that a softened dollar can enhance exports, maintain low interest rates, and support GDP growth, thereby serving as a potential boost for the economy.

At the same time, Trump’s persistent calls for rate cuts from Federal Reserve Chair Jerome Powell only add to the dollar’s weakness, implying that the recent 2.23% drop might just be the beginning of a more profound movement, potentially pushing investors to seek opportunities elsewhere.

Given this backdrop, Bitcoin's previous surges against a declining DXY appear solid. Additionally, BTC’s performance under $90,000 underscores its pre-breakout pattern. However, the pressing question remains whether investors are willing to act on this situation.

Key Bitcoin Divergences

The Federal Reserve has made it clear that it intends to operate independently, as demonstrated by its recent rate decision.

During the Federal Open Market Committee (FOMC) meeting, Chair Jerome Powell resisted external pressure and opted to keep rates unchanged, establishing that monetary policy will be primarily guided by data. Bitcoin's response was a minor 1.3% dip within the day, yet it remains effectively supported around $85,000.

However, this is not the only factor creating a stalemate in the market. Bitcoin's long-term holders (LTHs) have sold off 143,000 BTC over the past month, marking the fastest selling pace seen in four months, which has consequently pushed their net positions further into negative territories.

Bitcoin Performance

Source: Glassnode

According to AMBCrypto, this trend indicates that long-term holders do not seem convinced by the outlook based on the DXY.

Despite President Trump advocating for a softer dollar, analysts remain cautious about the long-term forecast. The United States, categorized as the world’s largest importer, is grappling with inflation risks, which could undermine the effectiveness of Trump’s stance on rate cuts.

In this scenario, it is understandable that Bitcoin has not mirrored its historical rises against a declining dollar. In fact, as buying interest declines, investor confidence may further weaken, compelling more capital to flow into safer asset classes.

Final Thoughts

As the landscape continues to shift, the interplay between the dollar's performance and Bitcoin's trajectory will be closely monitored, highlighting the importance of staying updated on market developments.