The dollar weakens + US stocks fall = Bitcoin rises? 2025 Financial Market Three Mysteries Solved

Yesterday (April 21, 2025), the global financial market showed complex dynamics: the US dollar index (DXY) fell 0.53% to close at 98.2790, and the three major U.S. stock indexes closed down collectively, while Bitcoin rose 4.06% against the trend and the price reached US$87,000. This phenomenon has sparked heated discussion: Is the weakening of the US dollar index a key driving force for Bitcoin’s rise? This article will analyze the background of the decline in the US dollar, the performance of Bitcoin, and the correlation mechanism between the two, and explore the impact of the decline in US stocks on Bitcoin. At the same time, we noticed that traditional views believe that Bitcoin is highly positively correlated with US stocks, but this market trend shows that this relationship may not be absolute. The background of the decline of the US dollar index The US dollar index (DXY) is an indicator of the strength of the US dollar against a basket of major currencies (such as the euro and the Japanese yen). Yesterday, DXY fell 0.53% to close at 98.2790, a new low this year. According to the latest data, the US dollar index opened at 98.7910, the closing price of the previous trading day was 98.8060, the highest price was 98.7910, and the lowest price fell to 97.9230. The decline continues the recent weakness of the dollar, with DXY falling more than 7% since early April, partly due to market uncertainty caused by US President Trump’s tariff policy. Picture USD Index Trend Chart USD Index fell from 110.170000 in early February 2025 to 103.190000 in March 2025, showing a significant downward trend. Yesterday (April 21), DXY fell further to 98.2790, exacerbating this decline. The decline in the US dollar may be related to the following factors: Changes in Fed policy expectations: The Fed has recently lowered its benchmark interest rate at three meetings, but said it will slow down the pace of easing, reducing the possibility of further interest rate cuts. Tariff policy impact: Trump's 145% tariff policy on China has triggered global trade tensions, causing foreign investors to sell dollar assets and put pressure on the dollar. Rising attractiveness for safe-haven: Changes in global capital flows have weakened the dollar's safe-haven status and prompted funds to flow to other assets. A weaker dollar is usually a positive for non-dollar assets such as commodities and cryptocurrencies because of their relative price increases. This laid the potential foundation for Bitcoin’s rise yesterday. Bitcoin's slightly rising market performance Yesterday, the price of Bitcoin rose 4.06% to $87,000, showing a certain degree of resilience. Although the increase is not very strong, Bitcoin's performance is particularly eye-catching considering the general decline of US stocks. Market data shows that Bitcoin trading volume increased yesterday, and some exchanges experienced net inflows of funds, indicating that investor sentiment has recovered. Direct drivers of Bitcoin’s rise may include technical support (such as price breaking through short-term moving averages) and positive signals of on-chain data (such as accumulation of coin holders). However, the decline in the US dollar index undoubtedly provides a macro boost. The weakening of the US dollar has reduced the attractiveness of holding US dollar assets, prompting some investors to turn to high-risk, high-return alternative assets such as Bitcoin. In addition, market concerns about inflation may further drive Bitcoin’s attractiveness as “digital gold”. The correlation mechanism between the US dollar index and Bitcoin Historically, the US dollar index and Bitcoin price tend to be negatively correlated. When the dollar strengthens, investors tend to hold dollar assets, and risky assets such as Bitcoin may be under pressure; conversely, weakening of the dollar may stimulate capital flow into the crypto market. Yesterday's dynamics fit this pattern: DXY fell 0.53%, while Bitcoin rose 4.06%. Figure 1 shows that since February 2025, the US dollar index has continued to decline, falling from 110.170,000 to 103.190,000, and fell further to 98.2790 yesterday. This trend contrasts sharply with the rise in Bitcoin price (from about $75,000 to $87,000), highlighting the potential negative correlation between the two. Analysts pointed out that the decline in the dollar provides room for other assets to rise, including cryptocurrencies. Specific mechanisms include: Capital flow: The weakening of the US dollar reduces the return rate of US dollar-denominated assets, prompting global capital to flow to high-yield assets, such as Bitcoin. Safe-haven demand: The dollar's decline in attractiveness as a traditional safe-haven asset may drive investors to turn to Bitcoin. Macro environment: Tariff policies may push up inflation expectations, and the Fed's slowdown in rate cuts may lead to further pressure on the dollar, creating a favorable environment for Bitcoin. However, the correlation between the US dollar and Bitcoin is not absolute, and short-term fluctuations may be affected by technical or emergencies. Divergence between the decline of US stocks and Bitcoin Yesterday, the three major U.S. stock indexes generally fell, with the S&P 500 falling about 1.8%, the Nasdaq index falling even more, and technology stocks led the decline. The market is generally attributed to tariff uncertainty and economic slowdown concerns, such as companies such as Apple (AAPL) being under pressure as China-U.S.-China trade tensions are intensifying. Traditionally, Bitcoin is highly positively correlated with U.S. stocks (especially technology stocks) because both are regarded as risky assets and often fluctuate simultaneously with market sentiment. However, yesterday's Bitcoin rise formed a significant divergence from the decline in US stocks, challenging this assumption. Possible reasons include: The risk aversion attributes appear: The decline in US stocks may prompt funds to flow to Bitcoin and hedge risks, and Bitcoin and gold prices have risen simultaneously support this view. Differences in tariff impact: Bitcoin, as a decentralized asset, is not directly affected by tariffs and may attract safe-haven funds. Market sentiment differentiation: The crypto market investor group is different from US stocks, and retail investors and "whales" may make their reactions more independent. Opposition and balance analysis Although the decline in the US dollar index may help Bitcoin rise, other factors cannot be ignored. For example, technical analysis shows that Bitcoin’s breakout through short-term resistance may attract buying, and on-chain data also reflects a rebound in market confidence. There are limitations in the correlation between the US dollar and Bitcoin. Yesterday's rise may be just a short-term volatility, not a direct result of the decline of the US dollar. Conclusion Yesterday, the US dollar index fell 0.53% to 98.2790, with US stocks generally falling, while Bitcoin rose 4.06% against the trend to $87,000, highlighting the potential driving effect of the weakening of the US dollar on Bitcoin. The downward trend of the US dollar index (from 110.170000 to 98.2790) contrasts with the rise in Bitcoin price, strengthening the negative correlation between the two. However, the divergence between Bitcoin and US stocks shows that the correlation between the two is not static. In the current macro environment, Bitcoin may show more independent investment characteristics. Looking ahead, the trend of the US dollar index will still affect the crypto market, but investors need to pay attention to comprehensive factors such as Fed policy, tariff progress and on-chain data. It is recommended to remain rational and closely follow market trends.