Bitcoin Nears Bullish Breakout as DXY Hits Lowest Since 2022

Bitcoin price could be on the cusp of a bullish breakout, potentially reaching its all-time high as a flag pattern forms and the U.S. dollar index crashes. Bitcoin was trading at $107,115 on Thursday, June 25, up 8.65% from its lowest point this week. A potential catalyst for Bitcoin is the ongoing decline in the U.S. dollar index (DXY), as Donald Trump considers candidates for the next Federal Reserve Chair. The DXY, which measures the dollar's performance against a basket of currencies, plunged to 96.98—its lowest level since 2022. The index has slumped nearly 12% from its highest level this year, and Morgan Stanley analysts anticipate another 9% crash. This pullback followed Trump's brokered a truce between Israel and Iran, which ended 12 days of hostilities. It also came after reports indicated Trump is weighing options for replacing Jerome Powell as Fed Chair in 2026, when Powell's term ends. Leading candidates include Scott Bessent, Kevin Hassett, and Kevin Warsh. Trump has repeatedly criticized Powell, urging him to cut interest rates. In a statement this week, Powell reiterated the Federal Reserve's wait-and-see stance. Richmond Fed President Tom Barkin echoed that sentiment on Thursday, stating: “There is little upside in heading too quickly in any one direction. Given the strength in today's economy, we have time to track developments patiently and allow the visibility to improve.” The dollar's weakness has deepened as investors anticipate that a new Fed Chair could move quickly on interest rate cuts. In a note on Wednesday, Morgan Stanley projected the Fed would implement seven rate cuts in 2026, representing an outlook that could benefit Bitcoin and other risk assets. Bitcoin price technicals signal a breakout is coming. The daily chart shows that Bitcoin price has remained above the 100-day Exponential Moving Average, which has provided substantial support since April. Bitcoin has formed a bullish flag pattern, consisting of a vertical line and a descending channel. This channel is part of the handle in a broader cup-and-handle formation. The cup has a depth of about 31%, and projecting the same distance from the upper edge of the handle yields a target price of $143,780. A drop below the 200-day moving average at $94,000 would invalidate the bullish thesis. A recent analysis suggests that, starting from January 2015, the value of Bitcoin began to show a significant correlation with two U.S. economic indicators: the Consumer Price Index (CPI) and the Dollar Index (DXY). This discovery opens new perspectives on the interaction between the bull market of cryptocurrencies and the traditional economy. The correlation between the US Dollar Index (DXY) and crypto prices isn't random—it's driven by a few key factors, including the dollar's role as a global reserve currency, market risk sentiment, and inflation hedging. The US Dollar Index (DXY) Hits 3-Year Low as Bitcoin Surges Past $107K Amid Global Uncertainty. Macroeconomist Lyn Alden noted that the US Dollar Index (DXY) is testing new cycle lows, hovering around 97.50, a level not seen since February 2022. While the US dollar struggled, Bitcoin showed resilience. On Sunday, the flagship cryptocurrency dropped below $100,000, the first time it did so since early May. However, following a ceasefire led by US President Donald Trump, Bitcoin rebounded sharply and is now trading around $107,930, according to data from CoinMarketCap. Crypto Market Prices Gain on Weaker Dollar. Analysts explains that a weak dollar effectively eases global liquidity – funds flow out of cash and into stocks, commodities and crypto. In practical terms, many crypto traders are betting that a weaker greenback will lift Bitcoin's appeal.