Dollar Index Surges, Pressuring Risk Assets
The US Dollar Index (DXY) is flexing its muscles at a precarious moment for global markets, and crypto bears are loving it. On November 5, 2025, the dollar index climbed to 105.72, up 0.8% intraday, etching out a textbook double bottom pattern after probing lows near 100 in late 2024. As crypto trader Lark Davis (@TheCryptoLark) astutely noted in his latest chart breakdown, this formation—coupled with a fresh MACD golden cross and a decisive price breach above the neckline around 104—signals renewed dollar dominance. It’s a classic “good for the greenback, not so great for risk assets” setup, with Bitcoin dipping below $62,000 and Ethereum scraping $3,100 in tandem.
Technical Indicators and Macroeconomic Context
Davis’s analysis, spanning October 2023 to now, paints a stark picture: red candlesticks dominate the DXY’s ascent, while the 50-week EMA (hovering near 102) acts as a stealthy support that, if reclaimed, could propel the index toward 108.50 and beyond. This isn’t just technical theater; it’s macro muscle. The dollar’s rebound echoes persistent U.S. inflation stubbornness—CPI clocked in at 3.2% for October—and hawkish Fed whispers amid softening job data. A stronger dollar siphons liquidity from emerging markets and speculative plays, crimping crypto’s oxygen supply. We’ve seen this movie before: In Q4 2022, a DXY spike to 114 correlated with BTC’s 70% plunge.
$DXY showing strength here
— Lark Davis (@TheCryptoLark) November 5, 2025
After a weekly MACD golden cross, we got a clean double bottom and price broke the neckline
Good for the dollar, but usually not great for risk assets like crypto
But keep an eye on the 50-week EMA. pic.twitter.com/gnfFaDV4qY
Implications for Cryptocurrency Markets
For crypto, the ripple effects are immediate and brutal. Altcoins, already nursing 15-20% losses from October highs, could test multi-month lows if DXY sustains above 106. Bitcoin’s correlation to the inverse dollar ETF (UUP) has tightened to 0.75 over the past quarter, per on-chain analytics, amplifying downside risks. Ethereum, post-Dencun, faces added pressure from layer-2 fee compression amid reduced DeFi activity. Yet, glimmers of hope persist: If global growth surprises to the upside—say, via China’s stimulus easing—the dollar’s rally might fizzle, handing crypto a breather.
Navigating the Volatility
Investors, heed Davis’s warning: Eyes on that 50-week EMA. A dip below could invalidate the bullish thesis, sparking dollar weakness and crypto relief. But with FOMC minutes dropping tomorrow and election volatility lingering, positioning for turbulence is prudent. Accumulate on DXY pullbacks? Risky. Hedge with stablecoins? Smarter. In this dollar-driven drama, crypto’s script flips from bull to bear—unless the greenback blinks first.