The relationship between bitcoin's price and the US Dollar Index has reached an almost four-year extreme, with a 30-day correlation coefficient of -0.90, indicating a strong inverse relationship. This means that when the dollar weakens, bitcoin tends to gain, and vice versa. The coefficient of determination suggests that around 81% of bitcoin's short-term price movements are associated with changes in the Dollar Index.
However, the current rally in bitcoin has stalled, coinciding with a bounce in the Dollar Index. Analysts point to broader macro risks, including high oil prices and geopolitical tensions, as factors supporting the Dollar Index.
Despite sustained inflows into US-listed bitcoin ETFs, industry leaders remain cautious, with some predicting that a meaningful recovery in bitcoin may not occur until later in the year. The ether-bitcoin ratio has also fallen, breaking down from a short-term ascending channel and reinforcing bearish momentum, which could lead to further underperformance of ether relative to bitcoin.