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 approximately 81% of bitcoin's short-term price movements are statistically linked to changes in the Dollar Index. However, it's essential to consider that this reading can be influenced by bitcoin's 24/7 trading structure, particularly weekend price fluctuations that are not reflected in the Dollar Index's weekday-only trading.
Bitcoin's recent 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 appears to be supported by broader macro risks, including elevated oil prices due to tanker traffic disruptions in the Strait of Hormuz and ongoing U.S.-Iran tensions.
Analysts at Marex noted that 'macro is still trying to lean against' bitcoin's continued rally, citing the rise in oil prices and the constraints in the Strait of Hormuz as headwinds that could keep inflation concerns alive and risk premia from fully unwinding. Despite this, sustained inflows into U.S.-listed spot exchange-traded funds (ETFs) have helped support prices. Industry leaders, however, remain cautious, with Anthony Scaramucci, founder of SkyBridge Capital, predicting that bitcoin may not experience a significant recovery until October or November, aligning with BTC's four-year reward halving cycle.
Scaramucci also noted that whales and long-time holders have continued to sell into ETF-driven demand. The ether-bitcoin (ETH/BTC) ratio has fallen nearly 3% to its lowest level since March 15, confirming a downside break from the short-term ascending channel and pushing the ratio back below the broader downtrend line that has defined the decline since August. 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.