The U.S. dollar index (DXY) has plunged to its lowest level since November 7, marking a sharp 5.37% decline from its yearly high. This drop is having a notable impact on Bitcoin and other cryptocurrencies, including Ethereum (ETH), Bitcoin Cash (BCH), and Ondo Finance (ONDO).
DXY Index Continues to Slide
The DXY index has experienced a harsh reversal over the past few months, declining from a January peak of $110.15 to its current level of $104.31. This move places it below both the 50-day and 200-day Weighted Moving Averages (WMA) and the key support level at $106.47.
Technical indicators reflect continued weakness, with the Relative Strength Index (RSI) and MACD showing a downward trend. The index has also moved below the 50% Fibonacci Retracement level, approaching the critical 61.8% level. If the downtrend persists, sellers could target the next support level at $103.
Impact on Ethereum, Bitcoin Cash, Ondo, and the Crypto Market
The weakening dollar has significant implications for cryptocurrencies, many of which have surged as a result:
- Ethereum (ETH): Climbed from last week’s low of $2,000 to $2,230.
- Bitcoin Cash (BCH): Rose sharply from $270 to near $400.
- Ondo Finance (ONDO): Increased to $1.2 amid broader market optimism.
The U.S. dollar’s decline is being driven by fears of an economic slowdown linked to Donald Trump’s trade tariffs and Elon Musk’s job cuts. A recent ADP report revealed that the private sector added just 77,000 jobs in February, heightening concerns about economic stability.
Federal Reserve Expectations and Market Reactions
Many analysts believe that tariffs will slow economic growth and increase inflation in the near term. Consumers may delay major purchases in anticipation of a potential trade settlement, adding uncertainty to the market.
As a result, expectations are growing that the Federal Reserve may implement more interest rate cuts beyond the three previously suggested by officials. Lower interest rates typically weaken the dollar and boost risk assets, including cryptocurrencies.
This outlook is also reflected in the bond market, where both short- and long-term yields have fallen. Historically, cryptocurrencies like Ethereum, Bitcoin Cash, and Ondo Finance have performed well in environments where the Fed eases monetary policy. A similar trend occurred in 2020 and 2021, when aggressive rate cuts fueled a major crypto bull run.
Additional Crypto Catalysts
Beyond the Fed’s policy moves, upcoming announcements regarding the U.S. Crypto Strategic Reserve and the Washington crypto summit could further influence the market. Investors will be watching closely for any regulatory developments that could impact digital assets in the coming weeks.
With the DXY index continuing to decline, cryptocurrencies are seeing renewed strength. If Federal Reserve policy turns more dovish and economic concerns persist, Ethereum, Bitcoin Cash, and Ondo Finance could continue their upward trajectory in response to a shifting macroeconomic landscape.
