The Dollar Index (DXY) measures the dollar against a basket of major currencies. It's a barometer of global financial conditions.
A strong dollar tightens conditions worldwide — it makes dollar debt harder to service, pressures emerging markets, and tends to coincide with risk-off moves. A weak dollar loosens conditions and often accompanies risk-on rallies.
Crypto, priced in dollars and traded globally, is sensitive to this. Big crypto rallies have often lined up with dollar weakness; sharp drawdowns with dollar strength.
It's not a perfect timing tool, but the dollar's direction is a useful frame for whether the macro backdrop is helping or hurting.