Dollar Index Plunges to Lowest Levels Since 1991, with Bitcoin’s Stochastic Suggesting a Drop Beneath $100K: Technical View

Dollar Index Decline Backs Bitcoin’s Long-Term Strength, Yet Short-Term Signals Hint at Possible Slip Below $100K

The dollar index (DXY) has registered a steep decline in the first half of 2025, which has supported the longer-term bullish narrative for bitcoin. Still, BTC’s short-term technical indicators are hinting at the possibility of a dip below the $100,000 level.

The DXY, a measure of the U.S. dollar’s performance against a basket of key global currencies, has dropped more than 10% since January—marking its worst six-month performance since the third quarter of 1991, based on TradingView data. The drop is linked to ongoing trade disputes under President Donald Trump and his persistent calls for the Federal Reserve to lower interest rates.

This sharp slide has pushed the dollar index below a crucial ascending trendline that’s been in place for 14 years. At the same time, the MACD histogram on the half-year chart has flipped into negative territory. These developments suggest increasing bearish momentum for the dollar and signal the potential for further declines.

“Looks like USD could drop another 10% easily… and maybe a lot more in the next 12-24 months,” stated Dan Tapiero, founder and CEO of DTAP Capital, on X (formerly Twitter), identifying dollar weakness as a tailwind for bitcoin’s price.

Bitcoin Faces Near-Term Pressure

Although a weaker dollar benefits bitcoin in the long term, BTC’s immediate outlook is less certain. On Monday, bitcoin fell by 1%, pulling back from the top edge of a bull flag consolidation pattern that has been forming for roughly six weeks.

Traders often use indicators like the stochastic oscillator to assess whether a rejection at the upper boundary of a consolidation range might signal a move lower.

Currently, bitcoin’s 14-day stochastic indicator is displaying a similar setup to early June, approaching a dip below the 80 threshold. A move out of overbought territory typically signals rising selling pressure and the possibility of bitcoin retreating within its current trading band.

This points to BTC potentially dropping below $100,000 in the short term. However, if bitcoin decisively breaks above the upper limit of the consolidation pattern, it would negate the bearish outlook and could pave the way for a rally toward $140,000.