Wells Fargo suggests that Bitcoin is quickly seeing a clear sky, referring to the relationship between key digital assets and dollar strength.
2025 wasn’t that year Bitcoin And the code supporters imagined. Instead of A sustainable market happiness Prices fell off the cliff as uncertainty peaked as it was driven by a dictatorial US administration.
Among these market conditions, Wells Fargo, one of the largest banks in the US, suggests that the bad fate of Bitcoin may be on the brink of change. But there may still be some cautious reasons.
Wells Fargo refers to DXY
Wells Fargo suggests that Bitcoin is quickly looking at a clear sky, referring to the relationship between key digital assets and dollar strength.
Specifically, an excerpt from a recent report from the bank. Share Matt Sigel, head of Vaneck by Digital Assets Research, revealed on Wednesday that Bitcoin has a strong 10-week delay inverse correlation with DXY. This index tracks the performance of the dollar against six major currencies.
“BTC has consistently tracked the inverted DXY with a 10-week delay, and the current drawdown is a response to the strong dollar in 4Q24, suggesting that the weaker environment we’ve seen since peaking on January 13th could be more constructive.”
Source: Wells Fargo pic.twitter.com/pequddpvqv
– Matthew Sigel, Recovering CFA (@matthew_sigel) March 19, 2025
Exploring this relationship, Wells Fargo argues that a 25% slump from Bitcoin’s this year’s high could be linked to the dollar strength in the fourth quarter of 2024.
However, DXY has fallen free after hitting that high. Specifically, it fell above 6% to 103.197. So Wells Fargo suggests that things could soon start looking for digital assets.
Wells Fargo, on the other hand, is not alone in this view. On March 7, the head of research at Global Macro Investor Julien Bittel emphasized that similar DXY drops had preceded the big Bitcoin move within months.
This week’s DXY movement was absolutely huge.
This type of decline has only occurred three times in the last 12 years. And when you look at what Bitcoin means in the future, it’s pretty eye-opening…
In August 2015, the -4 standard… pic.twitter.com/wuwwhvx5nk
-Julien Tiny, CFA (@bittjulien) March 7, 2025
However, the current market dynamics suggest that things are no longer easy.
Change global trends and how it affects Bitcoin
The simple reason why Bitcoin falls when the dollar is bolstered is that it has long served as a safe haven. In times of uncertainty, we see an increase in demand as investors escape from risky assets like crypto for the security of guaranteed US Treasury yields.
In this analogy, the dollar tends to weaken in an era of economic growth and expansion when investors want to take risks.
But in our latest example, the dollar is weak amid uncertainty. Instead of strengthening the dollar as expected, President Donald Trump’s tariff policies raised concerns about economic growth.
At the same time, through his stance on several geopolitical issues, Trump’s alienation of US allies raised real fears about the continued stance of the dollar as a global reserve currency.
All of these raise the question of whether the inverse correlation between Bitcoin and DXY is still retained.
One way this could happen is for the Federal Reserve to speed up its interest rate reduction timeline to stem growth concerns, but inflation is not a factor. It’s far away This is a difficult call with a target of 2%.
