US Dollar Index falls below 98... Is the likelihood of a rally for risk assets like Bitcoin increasing?

The U.S. Dollar Index (DXY) has dropped below 98 for the first time in three years, creating an environment seen as favorable for risk assets, including virtual assets (cryptocurrencies).

On the 12th (local time), CoinDesk, a media outlet specializing in virtual assets (cryptocurrencies), reported that "the U.S. Dollar Index has fallen below 98 for the first time since early 2022", adding that "the weak dollar trend may improve global liquidity and have a positive impact on speculative assets such as Bitcoin".

The recent decline in the Dollar Index is interpreted as resulting from the U.S. headline Consumer Price Index (CPI) for May coming in at 2.4% year-on-year, slightly below the forecast of 2.5%. With expectations for monetary easing by the U.S. central bank (Fed) rising, the market is increasingly betting on a possible rate cut in June.

According to CME FedWatch, the interest rate futures market is pricing in a 99.8% probability that the federal funds rate will be cut to 4.25~4.50% at the June Federal Open Market Committee (FOMC) meeting.

The media explained, "In recent years, when the Dollar Index has been above 100, dollar strength and risk aversion have weighed on the virtual asset market, but conversely, if it declines, financial conditions may ease and preference for risk assets may emerge."