Wells Fargo Sees Bitcoin Price Flipping Bullish Soon

Wells Fargo suggests that Bitcoin may soon see clearer skies, pointing to the relationship between the leading digital asset and dollar strength. 2025 has not been the year that Bitcoin and crypto proponents imagined. Instead of sustained market euphoria driven by a pro-crypto U.S. administration, prices have fallen off a cliff as uncertainty hits a peak. Amid these market conditions, Wells Fargo, one of the largest banks in the U.S., has suggested that Bitcoin's bad fortunes may be on the verge of a change. Yet, there may still be reasons for caution. Wells Fargo Points to the DXY Wells Fargo has suggested that Bitcoin may soon see clearer skies, pointing to the relationship between the leading digital asset and dollar strength. Specifically, an excerpt of a recent report from the bank shared by VanEck Head of Digital Assets Research Matt Sigel on Wednesday reveals that Bitcoin has a strong 10-week lagging inverse correlation with the DXY. This index tracks the dollar's performance against six major currencies. https://twitter.com/matthew_sigel/status/1902322057188172129 Exploring this relationship, Wells Fargo argues that Bitcoin's 25% slump from this year's highs can be linked to dollar strength in Q4 2024, which saw the index surge nearly 10% from 100.418 on September 30 to a high of 110.176 on January 13. But the DXY has been in a free fall since hitting that high. Specifically, it has fallen over 6% to as low as 103.197. As such, Wells Fargo suggests that things may soon begin to look up for the digital asset. Meanwhile, Wells Fargo is not alone in this view. On March 7, Head of Research at Global Macro Investor Julien Bittel highlighted that similar DXY drops had preceded massive Bitcoin moves to the upside within months. https://twitter.com/BittelJulien/status/1897956114370600994?t=uUFX6R6rNImx0PArdHSvjg&s=19 However, current market dynamics suggest that things may no longer be as straightforward. Shifting Global Tides and How it Impacts Bitcoin The simple reason Bitcoin falls when the dollar strengthens is that the dollar has long functioned as a safe haven. In times of uncertainty, it sees increased demand as investors flee risk assets like crypto for the safety of guaranteed U.S. treasury yields. In this analogy, the dollar tends to weaken during times of economic growth and expansion when investors are more willing to take risks. In the latest instance, however, the dollar is weakening amid uncertainty. Instead of strengthening the dollar as expected, President Donald Trump's tariff policies have raised concerns about economic growth. At the same time, Trump's alienation of the U.S. allies through his stance on several geopolitical issues has raised real fears about the dollar's continued stance as the world's reserve currency. All of these raise the question of whether the inverse correlation between Bitcoin and the DXY will still hold.  One potential way this can happen is for the Federal Reserve to speed up its interest rate cut timeline to stave off growth concerns, but inflation remains far from its target of 2%, making it a tough call.