Dollar Index Declines, Clearing the Path for Bitcoins Growth

The cryptocurrency market is bracing for a significant price movement. The US Dollar Index (DXY) has fallen to a two-year low, while on-chain metrics indicate hidden accumulation of Bitcoin and a supply deficit.

For the first time since early 2022, the DXY has dropped below the 98 mark. A weakening dollar typically creates a favorable environment for risk assets, including cryptocurrencies, as noted by CoinDesk’s senior analyst James Van Straten.

This decline in the index is linked to fresh inflation data from the US, with the annual rate coming in at 2.4%, which was below analysts’ expectations of 2.5%. This has bolstered market expectations for a loosening of monetary policy by the Federal Reserve.

According to the CME FedWatch, 97% of traders anticipate that the Fed will maintain the current key interest rate at its upcoming meeting.

Conversations about de-dollarization and uncertainty in US trade policy are also putting additional pressure on the American currency.

Amid a positive macroeconomic backdrop, on-chain data for Bitcoin is signaling a tightening supply. Despite low activity among retail investors and recent negative funding rates, major players continue to accumulate the asset.

The number of coins held in centralized exchange wallets continues to decline. Since the beginning of 2025, this figure has dropped by 14%, reaching 2.5 million BTC—the lowest level since August 2022.

Over-the-counter (OTC) platforms, often utilized for large transactions, are also experiencing a shortage, with their reserves hitting an all-time low.

According to CryptoQuant, since January, the balances of wallets linked to the OTC segment of miners have decreased by 19%, down to 134,252 BTC.

It’s worth noting that, at the end of May, analysts recorded a shift of Bitcoin whales from accumulation to selling.