As December approaches its end, the US Dollar Index (DXY) has performed quite poorly throughout the year—nearly a 10% decline. Many institutions and media outlets are calling this one of the worst performances of the year, and possibly the weakest annual trend since 2003.

So, what exactly is happening to the dollar? Let’s break it down along a few main lines:

**First, the "pricing game" of rate cut expectations has ended**

The market has already digested the rate cut expectations. Now, the real concern is whether there will be further cuts in 2026 and how large they might be. Traders are already preparing for a more easing-oriented 2026, which directly suppresses the dollar’s valuation. Actual actions by the Federal Reserve have become less significant.

**Second, policy and trade uncertainties are killing valuations**

Unresolved issues regarding tariffs and trade policies within the US weaken the dollar’s appeal. Consumers are also starting to worry about inflation and tariff pressures, which in turn dampens market risk appetite. The halo of the dollar as a "safe haven asset" is also fading.

**Third, the "pain points" of US fiscal policy and the long-term impact of de-dollarization**

The fiscal deficit for 2025 is projected to reach $1.8 trillion. While tariffs can generate some revenue, they are far from enough to fill this gap. More fundamentally, global central banks now prefer allocating gold over simply stacking dollar assets, breaking the unilateral consensus of "dollar supremacy," which is detrimental to the dollar in the long run.

**Gold is taking off, what can the crypto world learn from this?**

Gold has hit new highs repeatedly this year, driven by rate cut expectations, safe-haven demand, central bank purchases, and the weakening dollar. This logic reinforces the overarching narrative of "countering fiat devaluation and hedging against uncertainty"—which is precisely the core reason why cryptocurrencies are viewed positively in the long term.