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. This implies that when the dollar weakens, bitcoin tends to gain, and vice versa. The coefficient of determination is 0.81, suggesting that approximately 81% of bitcoin's short-term price fluctuations are statistically linked to movements in the Dollar Index.
Bitcoin's recent rally has stalled, coinciding with a rebound in the Dollar Index. The outlook for the Dollar Index is supported by broader macro risks, including elevated oil prices and geopolitical tensions. Analysts note that oil price increases and supply chain disruptions may pose a headwind for bitcoin's continued rally. Meanwhile, sustained inflows into US-listed spot exchange-traded funds have provided price support, but industry leaders remain cautious.
Some experts predict that bitcoin may not experience a significant recovery until later in the year, citing the four-year reward halving cycle and continued selling by whales and long-time holders. The ether-bitcoin ratio has also fallen, breaking down from a short-term ascending channel and pushing below a broader downtrend line, which may indicate further underperformance of ether relative to bitcoin.