First After 3 Years:
The U.S. Dollar Index (DXY) falling below 98 for the first time in three years has created an environment where risky assets like cryptocurrencies can gain value.
The U.S. Dollar Index (DXY) is an important indicator that measures the strength of the dollar against major global currencies. The index has dropped below 98 for the first time since early 2022, highlighting a significant change in the markets. This decline could create a positive ground for a new wave of increases, especially in cryptocurrencies like Bitcoin (BTC).
The weakening of the dollar is generally leading to an increase in risk appetite in the markets. According to the most recently announced data, annual inflation in the U.S. occurred slightly below expectations, at 2.4% instead of 2.5%. This situation has made the expectation of a rate cut by the U.S. Federal Reserve (Fed) in June almost certain. According to the CME FedWatch tool, there is a 99.8% probability that interest rates will be lowered to the 4.25-4.50% range at the June meeting.
New Opportunities for Cryptocurrencies
In recent years, the DXY being above 100 has meant a strengthening dollar; this generally had a negative impact on speculative assets like stocks and cryptocurrencies. However, in the current environment, the weakening of the dollar is creating a supportive outlook for risky assets by increasing global liquidity.
Additionally, it is noted that uncertainties in trade policies under the Trump administration and global “de-dollarization” rhetoric have been influential in the dollar's loss of value. If these conditions persist, a new and strong upward trend may begin in cryptocurrency markets.
Stay tuned for new developments.