Bitcoin’s Bull Run? Historic DXY Drop Signals Major Upside
The US Dollar Index (DXY) experienced one of its steepest three-day declines this week, dropping 5.4% from 109.881 to 103.967 since Monday. This sharp downturn has caught the attention of market analysts, who see it as a potential bullish catalyst for Bitcoin.
Jamie Coutts, Chief Crypto Analyst at Real Vision, pointed to historical data suggesting that similar DXY collapses have coincided with key Bitcoin price cycles. On X, Coutts highlighted that significant DXY declines have historically aligned with Bitcoin bear market bottoms or mid-cycle bull runs.
In his first backtest, Coutts analyzed eight instances since 2013 where the DXY fell more than -2.5% over three days. In each case, Bitcoin surged over the following 90 days, delivering a 100% win rate with an average return of +37%, potentially pushing BTC to $123,000. A one-standard-deviation move above this could send Bitcoin as high as $146,000, while even the worst-case scenario showed a 14% gain, reaching $102,000.
His second backtest examined DXY drops of over -2.0% and found that Bitcoin posted gains in 17 out of 18 instances (94% success rate). The average 90-day return was +31.6% ($118,000 BTC), while a one-standard-deviation move could see Bitcoin at $141,000. The lowest recorded return in this setup was -14.6% ($76,500 BTC).
Coutts also emphasized the broader market implications of this DXY move, stating:
> "People don’t realize the significance of this DXY drop. It’s the 4th largest 3-day decline ever, creating a liquidity-positive environment. Yet, Bitcoin just had its worst February in a decade, and the Top 200 altcoin index took another hit. The data suggests a major bull cycle reset."
With historical patterns favoring Bitcoin in response to sharp DXY drops, all eyes are now on whether this latest plunge fuels another major rally.