Bitcoin, dollar move in near-perfect opposition. It hasn’t been this extreme in almost 4 years.
For bitcoin BTC$77,908.91 traders, the direction of the Dollar Index (DXY), a measure of the greenback’s strength against a basket of other currencies, hasn’t mattered this much in nearly four years.
That’s because the 30-day correlation coefficient between the two now stands at -0.90, according to TradingView, the most negative reading since September 2022. A reading below 0 indicates an inverse relationship: When the dollar weakens, bitcoin gains, and vice versa.
Keep in mind, though, that the reading, while widely tracked, can be influenced by bitcoin’s 24/7 trading structure, particularly weekend price action that is not mirrored in the Dollar Index’s weekday-only trading.
The coefficient of determination, or correlation squared, comes in at 0.81, implying that roughly 81% of bitcoin’s short-term price moves are statistically associated with moves in the index.
Notably, bitcoin’s rally has stalled since hitting highs above $79,000 on Wednesday. This comes as DXY bounced to 98.75 from the April 17 low of 97.63.
The outlook for the Dollar Index appears supported by broader macro risks, including elevated oil prices tied to the tanker traffic disruptions in the Strait of Hormuz and a continued U.S.-Iran standoff over ceasefire negotiations.
“Macro is still trying to lean against it [BTC’s continued rally]. Oil has risen for five straight sessions and Hormuz remains effectively constrained. That should be a headwind because it keeps the inflation channel alive and keeps risk premia from fully unwinding,” analysts at Marex said in an email.
One positive is the sustained inflows into the U.S.-listed spot exchange-traded funds (ETFs). While those are keeping prices supported, industry leaders are still taking a cautious approach.
Anthony Scaramucci, founder of SkyBridge Capital, said bitcoin may not see a meaningful recovery until October or November, and the current price action aligns with BTC’s four-year reward halving cycle. He said that whales, who hold large numbers of BTC, and long-time holders have continued to sell into ETF-driven demand. Stay alert!
By Omkar Godbole|Edited by Sheldon Reback
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