The U.S. dollar is once again approaching a level that has historically aligned with the start of major Bitcoin bull markets.
The Dollar Index (DXY) has broken below its long-term trend structure and is now trading near the 96 area, a zone that has repeatedly marked turning points in global liquidity cycles.
Key Takeaways
DXY is testing 96 after breaking its long-term trend, a level tied to past Bitcoin bull runs.
Previous drops below 96 in 2017 and 2020 were followed by 7–8x Bitcoin rallies.
Dollar weakness typically pushes capital toward scarce assets like Bitcoin.
Gold’s extreme momentum adds to the case for a possible rotation into crypto.
This move places the dollar at a technical crossroads that traders and macro analysts are watching closely, as previous breaks below this level have coincided with powerful rallies in crypto markets.
Why the 96 Level Matters
The 96 level on DXY has acted as a critical threshold in past cycles. When the dollar has slipped below this zone and failed to recover quickly, capital has tended to move away from cash and toward alternative stores of value.
In mid-2017, DXY dropped under 96 and stayed weak for several months. Bitcoin responded with an explosive rally, climbing nearly eight times in roughly half a year. A similar setup appeared during the 2020 pandemic period, when aggressive liquidity injections pushed the dollar lower once again. Bitcoin went on to rise about sevenfold, while Ethereum and many altcoins delivered even larger gains.
Liquidity Cycles and Bitcoin’s Role
These episodes highlight how liquidity cycles often unfold. A weakening dollar reduces the relative appeal of holding cash, encouraging investors to seek assets with limited supply or perceived inflation protection.
Bitcoin has consistently benefited from this environment. As liquidity expands and the dollar loses strength, capital rotation into scarce digital assets has accelerated, especially when macro conditions reinforce risk-seeking behavior.
Gold’s Signal Adds Context
Adding another layer to the setup, crypto analyst Michaël van de Poppe recently pointed out that gold’s momentum has reached extreme levels. Gold’s daily RSI has moved above 91, a reading seen only once before, during the late-1970s peak.
The only day that the Gold price has hit this level of an RSI: 91+.
That was the peak day during 1979.
The only occurrence in history.
It's higher than during August '20.
After August '20, Gold consolidated & #Bitcoin went 5-6x. pic.twitter.com/a4CENbYUOP
— Michaël van de Poppe (@CryptoMichNL) January 29, 2026
In 2020, a similar surge in gold momentum was followed by a consolidation phase, while Bitcoin entered a strong multi-month rally. The current divergence, with gold overheated and Bitcoin still lagging, is being watched as a potential signal of rotation rather than exhaustion.
What Markets Are Watching Now
The key question is whether the dollar can reclaim lost ground. If DXY remains below 96 and confirms a structural breakdown, the macro backdrop would closely resemble conditions that previously preceded strong Bitcoin advances.
While no outcome is guaranteed, the combination of dollar weakness, historical precedent, and shifting liquidity dynamics suggests that Bitcoin could be approaching a pivotal moment if the dollar continues to slide.
