The USD faces a risk of falling by up to 10% this year if the Fed cuts interest rates more aggressively than the market expects.
The warning was voiced by State Street, one of the world's largest asset managers, which sees the possibility of monetary policy becoming looser in the near term.
Currently, the market expects two interest rate cuts.
However, analysts do not rule out the possibility of three cuts if financial conditions continue to loosen.
If this scenario occurs, the attractiveness of dollar-based assets is expected to decline, thus putting pressure on the value of the currency. A weaker dollar usually opens up space for the rise of risky assets, including Bitcoin.
Historically, there has been an inverse relationship between the USD Index and the price of Bitcoin. When the dollar weakens, crypto often receives support from increased global liquidity and investor risk appetite.
However, this relationship does not necessarily happen automatically.
Factors such as market sentiment, profit-taking and monetary policy uncertainty still play an important role in determining the direction of prices.
If the dollar really does depreciate as expected, the crypto market may once again become the focus of investors looking for alternatives to fiat currencies.
