They noted the strong inverse correlation between the US Dollar Index and cryptocurrencies.
A stronger dollar often restrains risk assets, while a weaker dollar usually supports rallies across Bitcoin, Ethereum, and the broader market.
Recent data shows that hedge funds hold unusually large short positions against the dollar. This increases the risk of a reversal with massive pressure on crypto.
Analysts said that a strong rebound in the dollar would threaten the foundation of the bullish narrative that many Ethereum (ETH) holders expect to unfold into 2026.
The Dollar’s Most Crowded Bet Is the Wrong One
The top half is the broad dollar index. The bottom half is hedge fund positioning in the dollar, a simple read on whether the fast money is leaning long or short. When that lower line sinks deep into negative territory, it means…
— EndGame Macro (@onechancefreedm) November 25, 2025
DXY Above 200-day MA
The US Dollar Index (DXY) has moved above its 200‑day moving average for the first time in months and broke a prolonged period of weakness.
Traders said that the index now sits in position to push through a multi‑month downtrend.
$DXY Is now attempting a break out of this 7-8 month down trend.
It was able to close above its Daily 200MA/EMA for the first time in almost 9 months this week.
This isn't ideal for risk assets and has been putting pressure on as well. Part of it is due to the yen losing ground…
— Daan Crypto Trades (@DaanCrypto) November 23, 2025
If the dollar secures a decisive upside move, the effect on cryptocurrencies could play out quickly. Bitcoin and Ethereum have both shown sensitivity to dollar strength this year.
ETH Price Analysis: Critical Decision Zone
Ethereum trades near the $2,900 zone. The weekly chart shows the price holding a long‑term ascending trendline that has acted as a reliable support structure through 2024 and 2025. The trendline now forms the base of an extended wedge pattern that stretches toward the $4,000 area.
The major resistance zone remains near the $4,000 threshold, where multiple rallies have faced rejection. If Ethereum clears this resistance, the next phase could result in a new ATH at $10,000.
Source: TradingView
However, if the current support fails with USD strengthening, a breakdown below the trendline can push Ethereum into the $2,300 to $2,400 zone.
