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Historically, Bitcoin has surged between 500% and 1,367% following a drop in the U.S. Dollar Index (DXY) to the 100-point level. With the index once again approaching this critical threshold, many are asking: Could another BTC rally be on the horizon?

According to market analyst Marcel Pechman, the current macro environment is giving reasons for cautious optimism.

Is China Trying to Undermine the U.S. Dollar?

A Reuters report published on April 9 indicates that China’s central bank is encouraging domestic institutions to reduce their U.S. dollar exposure. Amid mounting pressure on the Chinese yuan, the government is reportedly asking major banks to help support the national currency.

Some analysts have interpreted this as an attempt by China to weaken the dollar. However, veteran market expert Jim Bianco offers a very different perspective.

Bianco: China Isn’t Trying to Damage the U.S. Economy

Bianco disputes the narrative that China is selling off U.S. Treasury bonds to harm the American economy. He points to the fact that the DXY has remained stable, hovering around 102 points.

Even if China is offloading some treasuries, Bianco argues, they are not converting the proceeds into yuan or other foreign currencies. Instead, they’re keeping the funds in U.S. dollars, which undermines the idea that Beijing is pursuing a hostile de-dollarization strategy.

Bitcoin Needs a Weaker Dollar to Break Out

Currently, the U.S. Dollar Index is trading at 102.665, still above the critical 100-point threshold that Marcel Pechman identifies as a potential catalyst for Bitcoin.

The last time the DXY dipped below 100 was in June 2020, during the height of the COVID-19 pandemic. What followed was a remarkable rally: Bitcoin jumped from $9,450 to $57,490 in a matter of months.

Similarly, in April 2017, a decline in the dollar index coincided with a Bitcoin surge from $1,200 to $17,610. These historical patterns suggest that Bitcoin tends to thrive when the dollar is under pressure.

Hope on the Horizon – But Not There Yet

While the current market setup could be laying the groundwork for a future BTC breakout, it’s important to note: the DXY hasn’t yet broken below the 100-point line. For that scenario to unfold, the dollar still needs to drop further.

That said, with growing macroeconomic tensions, currency instability, and central banks adjusting their strategies, the stage is being set for Bitcoin to potentially benefit from a weaker dollar—just as it has in the past.

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Madeline

I have been drawn to technology and science fiction since I was a child. Studying IT has drawn me to the world of cryptocurrencies, where I have been working since 2014. I have learned a lot since then. And I still have a lot to learn. What fascinates me most about them is that they connect so many worlds together and the possibility of free choice. Without limits.