Bitcoin, Ethereum Rally as US Dollar Hits 4-Year Low

The US dollar index (DXY) has crashed to 95.92, marking its weakest level in nearly four years, specifically since 2022, according to data from the research platform Finviz. This represents a significant drop from a previous level near 100. The decline was highlighted in recent reports from Bloomberg, which noted its Dollar Spot Index recorded its lowest four-day decline since former President Donald Trump announced new tariffs in April 2025. Traders in the $9.5 trillion per-day currency markets are increasingly betting on further dollar weakness, interpreting President Trump’s comment that the dollar is ‘doing great’ despite its ongoing downturn as a signal that the slide could continue, triggering additional selling pressure.

This relentless slide in the world’s dominant reserve currency has raised immediate concerns about its strength and has become a focal point for global market players. As the dollar weakens, attention is shifting decisively toward alternative assets. The simultaneous rally in cryptocurrencies alongside this currency depreciation suggests a capital rotation is underway, with investors moving funds into perceived risk-on assets to preserve value.

Amid the dollar’s decline, Bitcoin and Ethereum have posted notable gains. In the past 24 hours, BTC’s price rose above $89,000, while Ethereum climbed more than 3% to reach above $3,000. This price action reinforces a historical pattern where periods of US dollar weakness have often coincided with rallies in Bitcoin and other cryptocurrencies. When confidence in the primary reserve currency wanes, investors historically seek assets outside the traditional financial system.

Market analyst ‘Master of Crypto’ outlined several structural reasons for the dollar’s continued pressure in a post on X. He pointed to large US budget deficits, the Federal Reserve’s (FED) challenge in balancing inflation control with job market stability, steady bond supply, and foreign exchange (FX) hedging activities as key factors keeping the US dollar near recent lows. In this environment, he argued, holding idle cash becomes a significant risk for investors, pushing them toward assets with perceived scarcity and utility like Bitcoin and Ethereum.

While the correlation between a weak dollar and strong crypto markets is not a guaranteed indicator, analysts see a supportive backdrop for digital assets. Analyst ‘Milk Road Macro’ suggests the declining dollar could help support a broader cryptocurrency market recovery. He posits a specific sequence for capital flows: as the dollar weakens, capital will first flow into traditional safe-haven precious metals like gold and silver. Subsequently, this same capital is expected to rotate into Bitcoin, potentially fueling a more sustained price rebound.

The current market dynamics place Bitcoin and Ethereum in a spotlight typically reserved for gold—as potential hedges against both inflation and currency depreciation. The US dollar’s fall to a four-year low, driven by policy risks and macroeconomic factors, has accelerated a narrative of digital currency adoption for value preservation. Whether this marks the beginning of a prolonged crypto rally remains to be seen, but the immediate reaction underscores a growing investor view of cryptocurrencies as viable alternatives in a shifting global financial landscape.