The US dollar’s declining value could signal a strong quarter for the crypto market, according to crypto analyst Raoul Pal. The CEO of Real Vision highlighted that the weakening dollar may boost the crypto market, with Bitcoin already experiencing a nearly 4% surge over the past 24 hours as the dollar continues to slide. “With the dollar, rates, and oil headed lower, financial conditions are now easing fast and lead risk assets by a couple of months,” Pal noted in a March 5 post.
This statement comes shortly after US Treasury Secretary Scott Bessent shared his vision to reduce US interest rates. Historically, the second quarter has been Bitcoin’s third-best quarter on average, with returns of 26.89%, according to CoinGlass. At the time of publication, Bitcoin was trading at $91,860, as reported by CoinMarketCap.
Pal emphasized that out of all the factors impacting the crypto market, the US dollar’s strength is the most critical. A weakening dollar often leads investors to seek alternatives, such as crypto assets, to protect their wealth. Since February 5, the US Dollar Index (DXY) — which tracks the dollar’s strength against a basket of major currencies — has dropped 2.79% to 104.258, according to TradingView data.
Concurrently, Bitcoin has risen nearly 6% over the same period.
Crypto momentum predicts bullish quarter
The relationship between a bearish DXY and booming Bitcoin was also noted by crypto trading resource account Bitcoinsensus.
They stated, “Historically, a bearish DXY means one thing, bullish Bitcoin long term if the drop continues in the coming weeks.”
This trend was observed during the COVID-19 pandemic when stimulus measures and rate cuts led to a weaker US dollar. Investors turned to Bitcoin, and its price surged dramatically. Analysts echoed similar sentiments when Donald Trump was elected as US President in November, which saw the US dollar rise to yearly highs, negatively impacting Bitcoin at the time.
Macro guru and Real Vision chief executive Raoul Pal suggests that an extended crypto bull run could last until 2026. He introduced the concept of the “Banana Zone” – a period of rapid and explosive growth for digital asset prices. Pal believes that the second phase of this zone is set to begin soon.
“But by the back end of March, we should start to see prices accelerate, and then in April, May, and June, we should see some really significant price action as the second phase of the Banana Zone kicks in,” Pal explained. Pal also suggested that the business cycle could extend into the following year, which he believes would carry the crypto market along with it. “My view is that the business cycle is taking a long time below 50.
It’s starting to expand now, and that has probably extended the cycle into 2026,” he stated.