The correlation between bitcoin and the Dollar Index has reached its most extreme level in nearly four years, 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 approximately 81% of bitcoin's short-term price movements are statistically linked to changes in the Dollar Index. However, bitcoin's recent rally has stalled, coinciding with a bounce in the Dollar Index. Broader macro risks, including elevated oil prices and geopolitical tensions, appear to be supporting the Dollar Index.
Analysts believe that these factors may continue to pose a headwind for bitcoin, with some predicting that a meaningful recovery may not occur until later in the year. Meanwhile, the ether-bitcoin ratio has fallen to its lowest level since March 15, reinforcing bearish momentum and potentially indicating further underperformance of ether relative to bitcoin.