What’s Going On With The US Dollar And How Does It Affect Bitcoin, Ethereum Prices?

Reason to trust Strict editorial policy that focuses on accuracy, relevance, and impartiality Created by industry experts and meticulously reviewed The highest standards in reporting and publishing How Our News is Made Strict editorial policy that focuses on accuracy, relevance, and impartiality Ad discliamer Morbi pretium leo et nisl aliquam mollis. Quisque arcu lorem, ultricies quis pellentesque nec, ullamcorper eu odio. The Bitcoin and Ethereum prices rallied after reports of the US dollar crashing spread across the market. Recent data show that the US dollar has fallen to its lowest level in four years, raising concerns about the strength of the world’s dominant reserve currency. As the dollar weakens, market players are beginning to shift attention to alternative assets such as precious metals and digital currencies, including BTC, which is increasingly viewed as a potential hedgeagainst rising inflation and currency depreciation.  US Dollar Falls To Lows Not Seen In 4 Years

New reports from Bloomberg highlight the relentless slide in the US dollar index (DXY) over recent weeks, with the price tumbling further after President Donald Trump’s comments on the currency’s performance. Sources revealthat Trump said the dollar is “doing great,” despite its ongoing downturn.  Related Reading Analyst Says Chainlink Price Could Crash 50% If This Level Fails 13 hours ago

Traders interpreted the President’s seemingly indifferent response to the declining dollar as a signal that the slide could continue, triggering further selling pressure. Data from the web-based stock market research platform Finviz showsthat, as of writing, the US dollar index has crashedto 95.92 from a previous level near 100. This marksits weakest level in nearly four years, specifically since 2022.  Source: X

Additionally, Bloomberg reportedthat its Dollar Spot Index also recorded its lowest four-day decline since Trump announced new tariffs in April 2025. Traders in the $9.5 trillion per-day currency markets are also increasingly betting that the dollar could decline further, as US policy risksweigh on the world’s primary reserve currency. 

Amidst the decline in the US dollar index, cryptocurrencies like Bitcoin and Ethereum are posting gains. BTC’s price roseabove $89,000, while Ethereum has climbed more than 3% to reach above $3,000, in the past 24 hours. This simultaneous rally in cryptocurrencies alongside the weakening US dollar suggests that investors may be shifting capital to risk-on assets. 

Market analyst ‘Master of Crypto’ recently outlinedseveral reasons behind the continued decline in the weakening US dollar in a post on X. He explained that large budget deficits, the FED’s challenge of balancing inflation control with job market stability, steady bond supply, and FX hedging activities are keeping the US dollar near recent lows. According to him, in this type of market environment, holding idle cash becomes a significant risk for investors.  Related Reading Here’s How Much XRP Ripple Execs Have Dumped So Far 1 day ago Possible Implications For The Bitcoin And Ethereum Price

Historically, periods of US dollar weakness have often coincided with rallies in Bitcoin, and other cryptocurrencies. When the dollar declines, investors sometimes seek alternative assets to preserve value. This can increase demand for Bitcoin and Ethereum, which are viewed by many as alternative stores of valueand risk-on assets. 

While this correlation is not a clear indication of a potential cryptocurrency rally, analysts like ‘Milk Road Macro’ suggestthat the declining dollar could help support a broader crypto market recovery. He said that as the dollar weakens, capital will flow into precious metals like gold and silver. Soon after, this same capital is expected to rotate into BTC, potentially fueling a price rebound.  BTC fails to recover above $90,000 | Source: BTCUSD on Tradingview.com Featured image created with Dall.E, chart from Tradingview.com