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The U.S. dollar is weakening again, and investors are watching closely. As the Dollar Index drops to a 4-month low, fears of possible yen intervention are growing. 

Historical data shows that a weaker dollar has always helped Bitcoin rise sharply, raising the question of whether this drop could spark the next Bitcoin rally.

Dollar Index Hit 4-Month Low as Yen Intervention Talk Grows

The U.S. Dollar Index (DXY) has fallen to around 96.8, its lowest level in nearly four months. This puts the dollar more than 15% below its 2022 high, making its recent performance the weakest seen since 2017.

However, experts say that the dollar’s fall became sharper after the U.S. Federal Reserve contacted major banks to check conditions in the Japanese yen market.  Such checks are often seen as early signals of possible foreign exchange intervention. 

Soon after this, the dollar dropped quickly against the yen, moving close to 154 yen per dollar.

Ouch. https://t.co/cR8dt7bSpe — Ron DeSantis (@RonDeSantis) January 26, 2026 Even Japanese officials have also said they are ready to step in if currency moves become unusual. They confirmed they are in talks with U.S. authorities, which has increased talk of possible joint action.

What a Weaker Dollar Means for Bitcoin

Bitcoin has often shown an inverse relationship with the U.S. dollar. When the dollar weakens, risk assets like Bitcoin tend to benefit. However, the last time the Dollar Index saw a major fall, back in 2017, Bitcoin entered a historic bull run, rising from under $200 to nearly $20,000, making a 100% rally. 

Today, a similar setup is forming. Crypto analyst TED recently highlighted that Bitcoin’s correlation with the Japanese yen is near record highs. This means that if the yen strengthens due to intervention, Bitcoin could also see support.

In past yen intervention events, Bitcoin first saw sharp volatility, including a 29% weekly drop, followed by a strong 100% rally that doubled its price in a short time.

Arthur Hayes Sees Big Bitcoin Upside

Bitmex co-founder Arthur Hayes remains strongly bullish if liquidity returns. He believes that if central banks resume balance sheet expansion, Bitcoin could climb to $200,000 by March 2026. 

In a more aggressive view, he has suggested $500,000 is possible if global money flows surge.

Despite the growing speculation, Bitcoin is currently trading near $87,615, down 1% over the last 24 hours.