The ICE U.S. Dollar Index has dropped all the way to its lowest point since 2022. This steep drop is a good demonstration of the U.S. dollar’s ongoing “crisis of confidence.” This negative market landscape is at some point boosting other assets, such as Bitcoin, it has proven resilient regardless of the recent trade-war linked volatility. The dollar is under pressure too because of expectations for a more dovish turn from the Fed. That tremendous change is largely being propelled by the cataclysmic impact of U.S. trade policy.

This week, the ICE U.S. Dollar Index plummeted. It dropped under the key 100 threshold and is heading back to its 2022 territory. This decline is indicative of a broader trend that suggests that the dollar’s attractiveness as the world’s global reserve currency is waning.

"The question of a potential dollar confidence crisis has now been definitively answered—we are experiencing one in full force." - Francesco Pesole

The dollar’s decline is happening amid a rise in global trade tensions, especially that between the United States and China. Bitcoin’s price has gone up and down dramatically with the week’s news on tariffs. Despite these fluctuations, Bitcoin has outperformed the tech-heavy Nasdaq, underscoring its potential as a safe haven asset during economic uncertainty.

"The dollar collapse is working as a barometer of ‘sell America’ at the moment." - Francesco Pesole

In fact, the Federal Reserve is changing its outlook because of these pressures, mainly caused by U.S. trade policy. Consequently, quite a few are looking for deeper rate cuts in 2025. As such, the anticipated shift toward a more accommodative monetary policy is closing yield differentials. The consequence is that the dollar is losing luster to investors.

"Market dynamics are shifting as the Fed’s outlook adjusts to pressures from U.S. trade policy, with expectations of steeper rate cuts in 2025 now taking hold. This pivot toward a more accommodative stance is poised to narrow yield differentials, weakening the dollar’s appeal and, in turn, creating a supportive tailwind for bitcoin." - Kruger

President Trump has been advocating for the Federal Reserve to cut interest rates, adding further pressure on the central bank to ease monetary policy. With the dollar weakening, other assets have been the beneficiaries.

"Like a rising tide, the dollar’s decline is lifting other assets." - Alex Kuptsikevich