The Bitcoin (BTC) price, currently at $76,350.69, is experiencing a significant inverse relationship with the Dollar Index (DXY), a gauge of the US dollar's strength against other major currencies. This correlation, which stands at -0.90 over the past 30 days according to TradingView, is the most extreme in nearly four years.
The coefficient of determination indicates that approximately 81% of Bitcoin's short-term price fluctuations are statistically linked to movements in the Dollar Index. However, it's essential to consider that Bitcoin's 24/7 trading schedule, particularly its weekend price movements, may influence this correlation since the Dollar Index only trades on weekdays. The recent rally in Bitcoin has stalled after reaching highs above $79,000, coinciding with the Dollar Index bouncing back to 98.75 from its April 17 low of 97.63. This development is set against a backdrop of broader macroeconomic risks, including elevated oil prices due to disruptions in the Strait of Hormuz and ongoing US-Iran tensions.
Analysts at Marex note that these factors could pose a headwind to Bitcoin's continued rally, as they keep inflation concerns alive and risk premia from fully unwinding. Despite these challenges, sustained inflows into US-listed spot exchange-traded funds (ETFs) are supporting Bitcoin prices. However, industry leaders remain cautious, with Anthony Scaramucci, founder of SkyBridge Capital, suggesting that a meaningful recovery in Bitcoin may not occur until October or November, aligning with its four-year reward halving cycle. Scaramucci also points out that large BTC holders have been selling into ETF-driven demand.
The ether-bitcoin (ETH/BTC) ratio has fallen nearly 3% to its lowest since March 15, breaking down from a short-term ascending channel and pushing back below a broader downtrend line. This breakdown suggests continued underperformance of ether relative to bitcoin.