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, indicating a strong inverse relationship. This means that when the dollar weakens, bitcoin tends to gain, and vice versa.
The coefficient of determination suggests that around 81% of bitcoin's short-term price movements are associated with changes in the Dollar Index. Bitcoin's recent rally has stalled, coinciding with a bounce in the Dollar Index. The outlook for the Dollar Index is supported by broader macro risks, including elevated oil prices and the U.S.-Iran standoff. Analysts note that macro factors are still leaning against bitcoin's continued rally, with oil prices rising and the Strait of Hormuz remaining constrained.
However, sustained inflows into U.S.-listed spot exchange-traded funds are keeping prices supported. Industry leaders remain cautious, with some predicting that bitcoin may not see a meaningful recovery until later in the year.
The ether-bitcoin ratio has also fallen to its lowest level since March 15, with bearish implications for the ETH/BTC pair.