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, indicating a strong inverse relationship. This means that when the dollar weakens, bitcoin tends to gain, and vice versa. The coefficient of determination, or correlation squared, is 0.81, suggesting that around 81% of bitcoin's short-term price fluctuations are statistically linked to moves in the DXY. Bitcoin's recent rally has stalled after reaching highs above $79,000, coinciding with the DXY's bounce to 98.75 from its April 17 low of 97.63.
The outlook for the Dollar Index is supported by broader macro risks, including elevated oil prices and the ongoing U.S.-Iran standoff. Analysts note that macro factors are still attempting to counter bitcoin's rally, with oil prices rising for five consecutive sessions and the Strait of Hormuz remaining constrained. However, sustained inflows into U.S.-listed spot exchange-traded funds (ETFs) are helping to support prices. Industry leaders, such as Anthony Scaramucci, are taking a cautious approach, predicting that bitcoin may not experience a significant recovery until October or November, aligning with its four-year reward halving cycle.
The ether-bitcoin (ETH/BTC) ratio has also fallen nearly 3% to its lowest level since March 15, confirming a downside break from its short-term ascending channel and pushing it back 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.