The relationship between bitcoin's value and the strength of the US dollar has reached an almost four-year extreme, with the 30-day correlation coefficient standing at -0.90. This indicates a strong inverse relationship, where a weaker dollar tends to boost bitcoin's value, and vice versa.
The correlation coefficient suggests that around 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 structure, particularly weekend price movements, can influence this reading. Bitcoin's recent rally has stalled after reaching highs above $79,000, coinciding with the Dollar Index's bounce to 98.75.
The outlook for the Dollar Index appears to be supported by broader macro risks, including elevated oil prices and ongoing US-Iran tensions. Analysts note that these factors could pose a headwind for bitcoin's continued rally.
Despite sustained inflows into US-listed spot exchange-traded funds, industry leaders remain cautious, with some predicting that bitcoin may not experience a significant recovery until later in the year. The ether-bitcoin ratio has also fallen to its lowest point since March 15, with bearish implications for the ETH/BTC pair.