Bitcoin Receives Favorable Cues as DXY Hits 21-Year Low

Bitcoin gets 'highly favorable' cues as the DXY dollar index sets a 21-year weakness record . The U.S. Dollar Index (DXY), which measures the value of the dollar against a basket of six major currencies, has fallen to levels not seen in two decades . This development creates a potentially bullish environment for risk assets like Bitcoin . Historically, Bitcoin and the U.S. Dollar Index (DXY) often move in opposite directions . When the dollar strengthens, Bitcoin tends to weaken, and vice versa . This inverse relationship is because Bitcoin is often viewed as an alternative store of value . When the dollar is strong, investors tend to stick with fiat currency, but when the dollar weakens, they look elsewhere, including Bitcoin . According to CryptoQuant, market activity is pointing toward renewed long-term confidence, with onchain data showing a significant dominance of outflows over inflows . The monthly outflow/inflow ratio has fallen to 0.9, a level not seen since the end of the bear market in 2022 and one that historically signals strong demand . Additionally, over 19,400 BTC were moved into institutional wallets, indicating strategic positioning by long-term holders . This trend suggests that investors are moving assets off exchanges, typically reflecting accumulation behavior . From a technical perspective, investors have paid higher prices over time to buy Bitcoin and the currency is in a rising trend channel in the medium long term . This signals increasing optimism among investors and indicates continued rise . However, despite the favorable macro backdrop, short-term technical analysis for Bitcoin is bearish . Analyst Omkar Godbole points to the 14-day stochastic indicator, which suggests an imminent downturn from overbought levels . Overall, the DXY weakness creates a bullish outlook for Bitcoin, but investors should be cautious of potential short-term pullbacks .