January 26 News, the US Dollar Index DXY has fallen to a four-month low of 97.1. Market expectations of a possible joint intervention by the US and Japan to influence the yen exchange rate have rapidly heated up, directly triggering a weakening of the US dollar and a collective strengthening of safe-haven assets. Meanwhile, gold and silver have hit new all-time highs, and Bitcoin is once again being viewed by funds as an important tool for hedging fiat currency devaluation.
Market data shows that after recording its worst annual performance since 2017 in 2025, the US dollar remains under pressure at the start of 2026. This month, DXY has declined by about 1.5%, primarily due to the combined effects of expectations of foreign exchange intervention and uncertainty around Federal Reserve policies. US President Trump continues to pressure for rate cuts, but the market is not convinced by a short-term policy shift, leading funds to proactively adjust their dollar exposure.
Several macro analysts have pointed out that DXY is in a critical technical breakdown zone. Rashad Hajiyev believes that the upcoming Federal Reserve policy meeting could trigger a new round of dollar decline, potentially pushing the index toward the 85 level. Ted Pillows also noted that the DXY chart has formed a classic descending triangle pattern, indicating that selling pressure continues to intensify.
The weakening of the dollar is rapidly amplifying Bitcoin’s impact. Historical data shows that Bitcoin and DXY have a long-term negative correlation. When the dollar depreciates and global liquidity improves, funds tend to flow into risk and scarce assets, including Bitcoin. Additionally, the current correlation between Bitcoin and the yen is near a historical high. Once the Japanese currency is pushed higher, it may indirectly influence the crypto market through arbitrage capital flows.
Analyst Donnie further pointed out that as long as DXY breaks below the key support zone of 96.2, macro capital flows will significantly shift toward risk assets from April to May 2026. He believes that Bitcoin has not yet fully reflected the true impact of global currency devaluation. Once the dollar continues to decline, crypto assets could become the primary beneficiaries of re-pricing of funds.
Against the backdrop of weakening dollar credit and intensified policy battles, Bitcoin is gradually shifting from a speculative tool to a macro hedge asset. In the coming weeks, the trend of DXY is likely to become a key variable in determining the direction of the crypto market in 2026.
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