The correlation between bitcoin's price and the Dollar Index has reached its most extreme point in nearly four years, with a 30-day correlation coefficient of -0.90. This indicates a strong inverse relationship, where a weaker dollar leads to bitcoin gains and vice versa. The coefficient of determination suggests that around 81% of bitcoin's short-term price movements are linked to the Dollar Index.
Bitcoin's recent rally has stalled, coinciding with the Dollar Index's rebound. Broader macro risks, including elevated oil prices and geopolitical tensions, appear to be supporting the Dollar Index.
Analysts note that these factors may hinder bitcoin's continued rally, with some predicting a meaningful recovery only in the later part of the year. Meanwhile, sustained inflows into US-listed spot exchange-traded funds are providing price support, although industry leaders remain cautious. The ether-bitcoin ratio has also fallen, reaching its lowest point since March 15, with bearish implications for the ETH/BTC pair.