The US dollar index (DXY) has crashed and moved to its lowest level since November 7 last year. The DXY index has plunged by over 5.37% from its highest level this year, potentially impacting Bitcoin and other cryptocurrencies like Ethereum (ETH), Bitcoin Cash (BCH), and Ondo Finance (ONDO).
DXY Index Crash Accelerates
The US dollar index has suffered a harsh reversal in the past few months. It dropped from a high of $110.15 in January to the current $104.31, its lowest level since November 7. It has dropped below the 50-day and 200-day Weighted Moving Averages (WMA) and the crucial support at $106.47.
The Relative Strength Index (RSI) and the MACD indicators have continued to fall in recent weeks. The index has moved below the 50% Fibonacci Retracement level and is approaching the 61.8% point. Therefore, the DXY index will likely keep falling as sellers target the next key support level at $103.
Implication on Ethereum, Bitcoin Cash, Ondo, and Other Cryptocurrencies
The falling DXY index has major implications for cryptocurrencies like Ethereum, Bitcoin Cash, Ondo Finance, and others. Indeed, Ethereum’s price has risen to $2,230 from last week’s low of $2,000 as the greenback plunged. Bitcoin Cash price has jumped from $270 to near $400, while Ondo price has risen to $1.2.
The US dollar index is falling due to expectations that Donald Trump’s tariffs and Elon Musk’s job cuts will cause an economic slowdown. This is already happening as a report by ADP showed that the private sector created just 77k jobs in February.
Most analysts expect that tariffs will hurt growth and boost inflation in the near term. One reason for this is that many consumers may decide to wait before making big purchases in anticipation of a negotiated settlement.
Therefore, these fears have led to rising hopes that the Federal Reserve will cut interest rates more times instead of three as officials hinted. By doing this, the Fed will prioritize economic growth over inflation, which is expected to tick up.
The increasing likelihood of more Fed cuts is also reflected in the bond market, where both short- and long-term bond yields have declined.
Cryptocurrencies like Ethereum, Ondo Finance, and Bitcoin Cash perform well when the Federal Reserve cuts interest rates. A good example is what happened in 2020 and 2021, when most coins surged as the Fed delivered numerous cuts to deal with the pandemic.
Besides the Fed’s actions, these coins are likely to respond positively to the upcoming announcements regarding crypto reserves and the crypto summit in Washington.
READ MORE: Bitcoin Cash Price Might Hit $4,100 in 30-90 Days: Analyst
