Bitcoin Investors Hope for Dollar Weakness, but Historic Pattern Warns of Possible Bounce
The U.S. dollar index plunged more than 10% during the first half of 2025, sparking optimism among bitcoin (BTC) traders that further dollar weakness could boost crypto prices through the remainder of the year.
Yet traders might want to stay cautious before betting too heavily against the dollar. On the weekly chart, the dollar index is approaching a “death cross,” a technical signal that occurs when the 50-week simple moving average (SMA) drops below the 200-week SMA—often interpreted as a sign of prolonged weakness.
However, historical trends tell a different story. Data shows that the dollar’s previous death crosses frequently marked the end of its declines rather than the start of deeper losses. Since 2009, there have been four weekly death crosses, each aligning with market bottoms and followed by strong rallies in the dollar index.
For example, the last death cross appeared in January 2021 near the 90 level on the index. From there, the dollar staged a robust recovery, eventually climbing above 114 by September 2022.
Of course, past patterns don’t guarantee future outcomes, and it’s possible this time could be different. Nevertheless, traders who consider the historical context may avoid falling into the trap of prematurely betting on further dollar weakness.
Currently, the dollar index—which gauges the dollar’s value relative to a basket of major currencies—has fallen 10.78% in the first half of 2025, marking its sharpest drop for that period since 1991.
