The correlation between bitcoin's value and the Dollar Index has reached its most extreme level in nearly four years, with a 30-day correlation coefficient of -0.90. This implies 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 fluctuations are statistically linked to movements in the Dollar Index. Despite this, bitcoin's recent rally has stalled, coinciding with a rebound in the Dollar Index.
Broader macro risks, including elevated oil prices and ongoing geopolitical tensions, appear to be supporting the Dollar Index. Analysts warn that these factors may continue to exert downward pressure on bitcoin's price. Meanwhile, sustained inflows into US-listed spot exchange-traded funds are providing some support for prices, but industry leaders remain cautious. Some experts predict that bitcoin may not experience a significant recovery until later in the year, citing the cryptocurrency's four-year reward halving cycle and ongoing selling by large holders.
The ether-bitcoin ratio has also fallen to its lowest level since March 15, with bearish implications for the ETH/BTC pair.