Dollar in Freefall: Stocks & Crypto Rocket as USD Loses Grip (2025 Rally Alert)

Greenback bleeds, markets feed—Wall Street and crypto traders feast on dollar weakness.

Risk assets roar back

When the world's reserve currency stumbles, everything else runs. Bitcoin's flirting with $70K again while the S&P 500 notches another record high. Funny how the 'safe haven' dollar's pain becomes everyone else's gain.

DeFi degens popping champagne

Ethereum and Solana both up double-digits this week as capital floods into altcoins. Even the SEC can't kill the bull run—though God knows they're trying.

The cynical take? This is what happens when the Fed's 'temporary' inflation measures outlive their welcome by three years. But hey—when the money printer's broken, might as well buy the dip... and the pump... and whatever comes next.

US Dollar Index and Economic Cycle

The US Dollar Index measures the dollar’s value against six major global currencies. According to recent data, the index stands at around 98. Pal highlights that a recovering economic cycle might increase disposable income for both individuals and businesses, thereby boosting demand for risky assets. Analysts have long posited that the current economic conditions and the weakening US dollar could trigger substantial price movements in the markets.

Raoul Pal predicts that the economic imbalances brought about by the post-pandemic era persist, suggesting the economic cycle may last longer than expected. He mentions that if the Dollar Index falls below 90, a powerful upsurge across all asset classes could result in the markets.

Global Liquidity and Cryptocurrencies

Pal points out that potential increases in global liquidity could elevate asset prices further. Governments may be compelled to enhance money supply to tackle high debt levels, potentially triggering a new upward trend in financial markets.

“Relying solely on the liquidity framework, business cycle framework, and financial conditions framework, there’s a high likelihood of increased liquidity due to debt rollover that strongly pushes up asset prices,” -Raoul Pal.

Raoul believes both traditional financial instruments and cryptocurrencies could see increased demand due to these developments. Nonetheless, the trajectory of the US dollar remains a determining factor. Changes in the Dollar Index will significantly impact investor behavior and international markets.

Pal refrains from making definitive time predictions on the duration of economic recovery and the evolution of financial conditions. However, he notes the importance of closely monitoring central banks’ stances, monetary policy measures, and global economic developments.

Potential weakening of the US dollar and rising global liquidity are factors that may result in volatility in risky market instruments like stocks and digital assets. During this period, investors are advised to monitor market dynamics carefully. Raoul Pal’s insights offer valuable considerations for developing investment strategies during economic recovery processes and monetary policy changes. Experts agree on the necessity of meticulously observing current conditions and considering market volatility.