The correlation between bitcoin's price and the Dollar Index has reached its most extreme level in nearly four years, with a 30-day correlation coefficient of -0.90. This indicates a strong inverse relationship, where a weaker dollar tends to boost bitcoin's value, and vice versa.
The coefficient of determination stands at 0.81, suggesting that approximately 81% of bitcoin's short-term price fluctuations are statistically linked to movements in the Dollar Index. However, it is essential to consider that bitcoin's 24/7 trading structure, particularly its weekend price action, can influence this reading. Bitcoin's recent rally has stalled after reaching highs above $79,000, coinciding with the Dollar Index's rebound 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 and the ongoing U.S.-Iran standoff. Analysts at Marex note that these factors are likely to create headwinds for bitcoin's continued rally, as they keep the inflation channel alive and prevent risk premia from fully unwinding. Despite these challenges, sustained inflows into U.S.-listed spot exchange-traded funds (ETFs) are helping to support prices.
Industry leaders, such as Anthony Scaramucci, remain cautious, predicting that bitcoin may not experience a significant recovery until October or November, aligning with its four-year reward halving cycle. The current price action is also influenced by whales and long-time holders selling into ETF-driven demand. Furthermore, the ether-bitcoin 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.
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.