The correlation between bitcoin (BTC) and the Dollar Index (DXY) has reached an almost four-year extreme, 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 suggests that around 81% of bitcoin's short-term price movements are associated with changes in the Dollar Index.
Bitcoin's recent rally has stalled, coinciding with a bounce in the DXY. Broader macro risks, including elevated oil prices and the U.S.-Iran standoff, appear to be supporting the Dollar Index. Analysts note that these factors may continue to pose a headwind for bitcoin's rally.
Despite sustained inflows into U.S.-listed spot exchange-traded funds (ETFs), industry leaders remain cautious, with some predicting that bitcoin may not see a meaningful recovery until later in the year.