The US dollar hits a 4-year low: what does this round of depreciation mean for the crypto market

The US Dollar Index DXY fell up to 1% intraday, breaking below the 96 level and hitting a new low since February 2022. This is not an isolated event. Over the past year, the dollar has depreciated nearly 50% relative to gold, with a decline of 15.6% from its 2022 high. Meanwhile, gold prices surged past $5,000 to hit a record high, indicating a deep shift in the monetary environment. What is behind this round of dollar depreciation, and how will it impact the crypto market?

Why Is the US Dollar Falling Into a Downward Channel

Policy Shift

The Federal Reserve’s stance is changing. According to the latest news, the market is beginning to reprice expectations of Fed rate cuts, which is the direct reason for the dollar’s pressure. When the Fed is expected to cut rates, the appeal of the dollar as a high-yield currency diminishes.

At the same time, potential exchange rate coordination interventions between the US and Japan are also exerting pressure on the dollar. Analysts point out that signals of policy coordination could intensify short-term downward pressure on the dollar, especially if the Fed adopts a dovish stance. This means that not only US policy is shifting, but global central bank policy coordination is also contributing to dollar depreciation.

Liquidity Environment Expansion

Behind the dollar’s depreciation is a quiet expansion of liquidity. Market analysis indicates that the Fed’s liquidity injections are ongoing, which is a key condition driving risk assets higher. When liquidity is abundant, investors tend to seek higher returns, meaning funds flow from the dollar into commodities, gold, and even cryptocurrencies.

Chain Reactions Are Already Occurring

Gold Takes the Lead

On January 24, 2026, gold prices broke through $5,000, achieving a 20% vertical surge within 24 hours. The logic behind this figure is simple: dollar depreciation leads to gold appreciation. Investors are fleeing into hard assets, a direct response to fiat currency instability.

Major institutions now set their gold target prices for summer 2026 between $5,400 and $6,500, indicating that market expectations for dollar depreciation are already quite consensus.

Contradictory Phenomenon in Crypto Assets

Interestingly, Bitcoin has not risen along with the dollar depreciation. Currently, Bitcoin trades around $89,170. Although the dollar is weakening, Bitcoin “should be rising but isn’t.” This contradictory phenomenon often signals that the market is waiting for confirmation of the direction.

On one hand, liquidity expansion should benefit risk assets; on the other hand, Bitcoin is still undergoing technical adjustments. This asynchronous movement may mean that the crypto market needs more time to digest this macro environment shift.

The Macro Background of 2026

Liquidity Will Soon Take Center Stage

Several market analysts point out that 2026 will be a year driven by liquidity. The combination of dollar depreciation, dovish Fed stance, and liquidity expansion will create an environment favorable to risk assets.

Opportunities from the Crypto Market Structural Bill

Related information mentions that the crypto market structural bill for 2026 is about to be introduced, resonating interestingly with the macro liquidity environment. If liquidity remains ample and policy conditions are friendly, the crypto market could face an important window of opportunity.

Summary

The break below the 96 level of the US Dollar Index is not only a technical breakthrough but also reflects a profound change in the global monetary environment. The dovish stance of the Fed, policy coordination, and liquidity expansion are driving dollar depreciation, with gold already being the first beneficiary.

For the crypto market, this round of dollar depreciation creates a favorable macro backdrop, but the current “should be rising but isn’t” phenomenon in Bitcoin suggests that the market is still waiting for confirmation. Once liquidity truly flows into risk assets, the crypto market may迎来 new opportunities. The macro environment of 2026 is quietly changing, and the key is to observe when funds will truly flow into crypto assets.