Bitcoin is circling $64,000 this week, and the setup is getting complicated. The US dollar has roared back, with the DXY index hitting its highest level since May 2025 and reclaiming the 100 level.
Historically, Bitcoin does not do well when the dollar is strong. DXY is inversely correlated with crypto markets, so this is a real headwind. Trader Daan Crypto Trades noted that DXY is breaking above 100 with support from its daily 200-day moving average. If that holds, it could squeeze risk assets further.
Trader Benjamin Cowen sees a bull case for DXY extending into the second half of 2026. ColinTalksCrypto flagged a megaphone pattern on the weekly chart that, if broken upward, could send DXY toward 106. That would be bad news for Bitcoin and other risk assets.
On the inflation front, May PCE data drops Thursday. April PCE hit three-year highs, driven partly by the US-Iran war impact on energy prices. The hope is that the peace deal and falling oil prices will cool things down. WTI crude has already fallen to $73 per barrel, down nearly 40% from its local peak.
But inflation pressures are spreading beyond energy. Federal budget deficits and supply chain issues are contributing too. CME FedWatch puts the odds of a July rate hike at around 36%.
There is a silver lining for Bitcoin bulls: history suggests whatever June does, July does the opposite. If June closes red, expect a July relief rally. Bitcoin has traded in a range bounded by its 21-month and 50-month EMAs, and a relief bounce would target the 50-month EMA as new resistance.
One more thing: Bitcoin inverse correlation to oil has helped preserve the $60,000 support level. As long as the peace deal holds and oil stays subdued, that floor is probably safe.
