Weak dollar could push Bitcoin price to new highs

The US dollar is currently showing significant weakness, which could turn out to be good news for Bitcoin. The Dollar Index (DXY) has fallen below its average of the past year, which has historically often marked the beginning of strong Bitcoin rallies.

The pattern is clearly visible in CryptoQuant’s charts. Every time the DXY drops below the 365-day average, periods of strong Bitcoin price increases follow. The current situation seems to be no exception.

Weak Dollar, Strong Bitcoin: A Time-Tested Correlation

“This chart highlights periods where the DXY trades below its 365-day moving average. Looking at historical data, it becomes clear that such periods have been highly favorable to BTC.” – By @Darkfost_Coc pic.twitter.com/viwbcfNhdM

— CryptoQuant.com (@cryptoquant_com) July 9, 2025

Dollar drops to weakest point in years

The DXY is now 6.5 points below its 200-day average, marking the largest deviation in the past 21 years. As US national debt continues to hit record levels, the dollar is becoming less attractive to investors.

Many investors choose during such periods to pull their money out of the dollar and instead invest in riskier assets like Bitcoin. This shift has everything to do with the loss of the dollar’s ‘safe haven’ status. When the dollar weakens, capital often flows into alternative investments.

The chart shows exactly that pattern. Every time the DXY drops below its yearly average for an extended period, Bitcoin rises. Interestingly, Bitcoin’s price has not yet reacted this time, though many expect it’s only a matter of time.

Bitcoin on the verge of new highs

According to analysts, this indicator works not only due to technical signals but mainly because more liquidity flows into the crypto market. This makes it a useful tool for spotting early bull markets.

Crypto analyst Jelle shares that view and predicts Bitcoin will soon quietly set new records, possibly on a regular weekday when nobody is paying attention. In his words:

At this rate, #Bitcoin will quietly make new all-time highs on a random Thursday morning - and everyone will be watching it from the sidelines.

Slowly creeping higher.

Less than 3% to go.

Bring it on.

— Jelle (@CryptoJelleNL) July 9, 2025

The signals clearly point to an exciting period for Bitcoin, with the dollar’s weakness potentially acting as a catalyst for a new rally.