The U.S. Dollar Index (DXY) just experienced its worst six-month performance in over three decades, plunging more than 10%, a decline not seen since Q3 of 1991. While this sharp fall is considered bullish for Bitcoin in the long term, short-term technicals indicate potential price weakness ahead for the flagship cryptocurrency.
Dollar Weakness Boosts Bitcoin’s Long-Term Case
The DXY, which tracks the U.S. dollar’s performance against a basket of global currencies, broke below a 14-year ascending trendline. Additionally, the MACD histogram on the half-yearly chart has fallen below zero, signaling a loss in upward momentum and suggesting deeper downside for the dollar.
“USD could drop another 10% easily… and maybe more in the next 12–24 months,” said Dan Tapiero, CEO of DTAP Capital, calling this scenario a tailwind for Bitcoin and other hard assets.
A weakening dollar typically favors store-of-value assets like Bitcoin, gold, and silver, as investors seek hedges against fiat depreciation.
Bitcoin’s Short-Term Technicals Signal Bearish Pressure
Despite the bullish long-term macro backdrop, Bitcoin’s short-term outlook is flashing warning signs. The leading digital asset failed to break out of a bull flag formation, rejecting resistance after hovering near $108,000.
Technical indicators suggest further downside:
- Stochastic Oscillator (14-day) is now crossing below 80, a key threshold that signals movement out of the overbought zone.
- This mirrors the same bearish crossover pattern seen in early June, which led to a price drop.
- The ongoing rejection at the upper boundary of consolidation suggests a potential return to levels below $100,000 if bullish momentum doesn’t return quickly.
If Bitcoin fails to break above the flag’s upper resistance, traders should watch for a possible retest of $95,000 to $98,000 in the near term.
Breakout Could Send BTC to $140K
While the stochastic downturn points to selling pressure, a decisive move above $108,000 could invalidate the bearish setup. A breakout from this range would likely lead to renewed buying interest, setting the stage for a potential rally toward the $140,000 level.
Bearish Near Term, Bullish Long Term
In summary, Bitcoin’s price may dip below $100K in the short run, driven by technical consolidation and momentum loss. However, the DXY’s historic breakdown provides a strong macro backdrop for medium- to long-term Bitcoin gains, especially if further dollar weakening continues into 2026.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.