Bitcoin receives a strong bullish signal as DXY hits a 21-year record low.

Bitcoin is facing a bullish opportunity thanks to the public debt situation and the weakening US dollar, as the US dollar index (DXY) has just recorded its lowest level in over two decades.

According to a new report released by the on-chain analysis platform CryptoQuant on Tuesday, the inverse correlation between Bitcoin and DXY continues to strengthen — meaning that a decrease in DXY will provide upward momentum for BTC.

DXY decline supports Bitcoin price

The price strength of Bitcoin has recently continued to receive positive support from the decline of the dollar Mỹ. Indeed, the USD has hit its lowest level against major currencies since the beginning of 2022.

Data from TradingView shows that the DXY index has dropped to 96.377 on July 1 — the lowest level in over three years and down more than 10% since the beginning of 2025.

Notably, CryptoQuant also points out that the DXY is currently fluctuating around the lower range of the 200-day moving average (MA200) — a zone not seen in over 20 years, reflecting the long-term weakening of the greenback.

DXY chart 1 week and MA 200 days | Source: TradingView "While U.S. public debt reaches a new all-time high, the DXY index has just hit a historical low — currently trading 6.5 points below the 200-day MA, marking the largest deviation in the past 21 years. Although this may seem concerning at first glance, it often benefits risk assets like Bitcoin," according to the author Darkfost in the Quicktake article on the blog.

Bitcoin has long shown an inverse correlation with DXY, however, in recent years, this relationship has become less clear.

However, Darkfost argues that this trend is still part of a broader pattern related to investment behavior in risky assets.

"When the USD weakens and loses its safe-haven role, investors will reassess their portfolios and adjust capital flows towards alternative assets."

The accompanying chart illustrates the relationship between the price performance of BTC and the DXY index compared to the 365-day moving average (MA365).

"This chart clarifies the phenomenon by highlighting the periods when DXY trades below the MA365 line. Based on historical data, it can be seen that such periods are often very beneficial for Bitcoin. Currently, we are in a phase where the weakening of DXY could be a catalyst for a new bullish phase of BTC — although so far, the price has not reacted clearly."

DXY and BTC | Source: CryptoQuant## Weak USD further strengthens the case for holding Bitcoin

As reported, the weakening momentum of the USD is increasing due to the impact of the new trade tariff policies from America.

For Bitcoin supporters, not just the US dollar but the entire fiat money system is gradually losing its advantage against digital assets.

"When the dollar is strong, there is a reason to hold it," economist Lyn Alden shared last week while discussing the "main competitor of Bitcoin."

"If the total credit and total amount of US dollars in the system continue to increase over the next 5, 7, or 10 years, then that is one of the macro factors indicating that owning Bitcoin is valuable," she added.

Dinh Dinh