The correlation between bitcoin's price and the Dollar Index 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 corresponds to bitcoin gains 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 correlation, bitcoin's recent rally has stalled after reaching highs above $79,000, 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 note that these factors may continue to pose a headwind for bitcoin's rally, with some industry leaders adopting a cautious approach.
Notably, sustained inflows into U.S.-listed spot exchange-traded funds have helped support prices, but long-time holders and whales have continued to sell into this demand. Meanwhile, the ether-bitcoin ratio has fallen to its lowest level since March 15, breaking down from a short-term ascending channel and reinforcing bearish momentum.