The correlation between bitcoin (BTC) and the Dollar Index (DXY) has reached its most extreme level in nearly four years, with a 30-day correlation coefficient of -0.90. This indicates a strong inverse relationship, where a weaker dollar leads to bitcoin gains and vice versa.
The coefficient of determination stands at 0.81, suggesting that approximately 81% of bitcoin's short-term price movements are statistically linked to the Dollar Index. Bitcoin's recent rally has stalled after reaching highs above $79,000, coinciding with the DXY bouncing back to 98.75 from its April 17 low of 97.63. Broader macro risks, including elevated oil prices and the U.S.-Iran standoff, support the outlook for the Dollar Index.
Analysts note that these factors may act as a headwind for bitcoin's continued rally, as they keep inflation concerns alive and prevent risk premia from fully unwinding. Despite sustained inflows into U.S.-listed spot exchange-traded funds (ETFs) supporting prices, industry leaders remain cautious.
Anthony Scaramucci, founder of SkyBridge Capital, predicts that bitcoin may not experience a significant recovery until October or November, aligning with its four-year reward halving cycle. The current price action is also influenced by whales and long-time holders selling into ETF-driven demand. Additionally, the ether-bitcoin (ETH/BTC) ratio has fallen nearly 3% to its lowest level since March 15, breaking down from its short-term ascending channel and pushing below the broader downtrend line.
This breakdown reinforces bearish momentum and increases the likelihood of further downside or extended consolidation in the ETH/BTC pair, indicating continued underperformance of ether relative to bitcoin.