Yeliz Akmaca 
The market actually shows that the US Dollar Index (DXY) has dropped to a four-month low. Speculation over a potential “yen intervention” between the US and Japan has intensified pressure on the dollar. At the moment, the DXY stands at 97.1, marking its weakest performance since September. Analysts say this could create upside potential for risk assets like Bitcoin.
DXY, which measures the dollar’s value against a basket of six major currencies, has been under pressure recently. The dollar’s worst annual performance since 2017 and a weak start to the year have unsettled markets. As it happens, this isn’t the only story—safe-haven assets like gold and silver are hitting new record highs.
Analyst Adam Kobeissi noted:
“If the dollar closes in the red this year, it would mark its first consecutive annual loss since 2006-2007. Look closely, and movements in gold and silver reveal fiat currency depreciation very clearly.”
Fortunately, the latest decline is linked to potential yen intervention. Reuters reported that the New York Fed conducted rate checks as a signal of possible coordinated action with Japan. This pushed the yen to a two-month high and weighed on the dollar.
Investors are also cautious ahead of the upcoming Fed meeting and a potential announcement from President Trump regarding Jerome Powell’s successor. Truthfully, despite Trump’s repeated calls for aggressive rate cuts, markets are not expecting an imminent policy shift. Data from the CME FedWatch Tool shows the probability of a 25 basis point cut at just 2.8%.
Analysts Warn of Further DXY Weakness
This market tension is prompting analysts to warn of additional downside risks. Rashad Hajiyev notes that the upcoming FOMC meeting could trigger a breach of the index’s 18-year support level:
“DXY could head to 85 first, then 75. At that point, dollar selling may fuel gains in gold and silver.”
Ted Pillows points out a descending triangle pattern on the DXY chart. Technically, this formation signals continued bearish momentum, raising concerns of a deeper decline.
How Could Bitcoin Be Affected?
Bitcoin and DXY have historically shown an inverse correlation, closely watched by market participants. As the dollar weakens, investors tend to shift toward riskier assets. Of course, this creates upward potential for Bitcoin prices.
Yen strength and dollar weakness could create short-term risks. Bitcoin’s correlation with the Japanese yen is near record highs. If yen intervention occurs, short-term risks may arise, but long-term dollar weakness could benefit Bitcoin. Analyst Donny notes that if DXY falls below 96.2, the effects may be seen around April or May 2026:
“BTC can still move upward, and I believe it will. The DXY decline, combined with MSTR, supports a mean reversion move. If the 96.2 support breaks, we could see significant upward movement in the first half of the year. Once BTC surpasses 107.4K and MSTR 231, dollar weakness will push targets significantly higher,” Donny added.
In short, the next few weeks may determine both the dollar’s direction and the trajectory of the crypto market. Essentially, market participants are hedging risk while chasing opportunities, which could translate into upward momentum for Bitcoin.
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