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.
However, it's essential to consider that bitcoin's 24/7 trading structure can influence this correlation, especially during weekends when the Dollar Index is not trading. The coefficient of determination is 0.81, suggesting that about 81% of bitcoin's short-term price movements are statistically linked to the Dollar Index. Recently, bitcoin's 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.
The outlook for the Dollar Index is supported by broader macro risks, including elevated oil prices due to disruptions in the Strait of Hormuz and ongoing U.S.-Iran tensions. Analysts at Marex note that macro factors are still opposing bitcoin's rally, with oil prices rising for five straight sessions, which could keep inflation concerns alive and risk premia from fully unwinding. Despite this, sustained inflows into U.S.-listed spot exchange-traded funds (ETFs) are supporting prices.
However, industry leaders remain cautious, with Anthony Scaramucci predicting that bitcoin may not see a significant recovery until October or November, aligning with its four-year reward halving cycle. He also noted that whales and long-time holders are selling into ETF-driven demand. The ether-bitcoin (ETH/BTC) ratio has fallen nearly 3% to its lowest since March 15, breaking down from its short-term ascending channel and pushing below the broader downtrend line.
This breakdown indicates bearish momentum and suggests further downside or extended consolidation in the ETH/BTC pair, pointing to continued underperformance of ether relative to bitcoin.