Falling US dollar is signaling a strong quarter for crypto: Raoul Pal

Real Vision CEO Raoul Pal says the weakening United States dollar could lead to a crypto market boost in the second quarter of the year, with Bitcoin jumping nearly 4% over the past 24 hours as the greenback continues to slide.

“With the dollar, rates and oil headed lower (all specific aims of Bessent), financial conditions are now easing fast and lead risk assets by a couple of months,” Pal said in a March 5 X post.

It comes only a day after US Treasury Secretary Scott Bessent expressed his vision to reduce US interest rates.

Q2 could be bullish for crypto

“Should signal a good Q2 for tech and crypto and hopefully H2 2025 too as these trends continue,” he said. Since 2013, the second quarter has been Bitcoin’s third-best quarter on average, with returns of 26.89%, according to CoinGlass.

Pal said that out of all three factors, the US dollar is the most critical factor in the crypto market. When the dollar weakens, investors often seek alternatives, such as crypto assets, to protect their wealth. 

Since Feb. 5, the US Dollar Index (DXY) — which tracks its strength against a basket of major currencies — has dropped 2.79% to 104.270, according to TradingView data.

Meanwhile, Bitcoin is up almost 6% over the same time frame, trading at $91,860, according to CoinMarketCap data.

Crypto trading resource account Bitcoinsensus said in a March 5 X post, “Historically, a bearish DXY means one thing, bullish Bitcoin long term if drop continues the next coming weeks.”

Related: Bitcoin price risks correction to $72K as investor sentiment weakens

This was seen just a few years ago during the COVID-19 pandemic — stimulus and rate cuts led to a weaker US dollar, investors turned to Bitcoin, and its price surged from $5,000 in March 2020 to over $60,000 by April 2021.

Analysts repeated the warning again when Donald Trump was elected as US President in November, as the US dollar rose to yearly highs. 

At the time, Real Vision chief crypto analyst Jamie Coutts said, “The macro backdrop has soured. Dollar strength is not good for Bitcoin.”

Magazine: Meet lawyer Max Burwick — ‘The ambulance chaser of crypto’

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.