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 weakening dollar tends to boost bitcoin's value, and vice versa.
The coefficient of determination suggests that around 81% of bitcoin's short-term price fluctuations are statistically linked to moves in the Dollar Index. Despite this, bitcoin's recent rally has stalled, coinciding with a bounce in the Dollar Index. Broader macro risks, including high oil prices and geopolitical tensions, appear to be supporting the Dollar Index.
Analysts warn that these factors may continue to pose a headwind for bitcoin's continued rally. Meanwhile, sustained inflows into US-listed spot exchange-traded funds are providing some price support, but industry leaders remain cautious. Some predict that bitcoin may not see a significant recovery until later in the year, aligning with its four-year reward halving cycle.
The ether-bitcoin ratio has also fallen to its lowest level since March 15, reinforcing bearish momentum and suggesting further downside or extended consolidation in the ETH/BTC pair.