The correlation between bitcoin and the Dollar Index has reached its most extreme level in nearly four years, 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. However, it's essential to consider that bitcoin's 24/7 trading structure can influence this reading.
The coefficient of determination suggests that approximately 81% of bitcoin's short-term price movements are statistically linked to changes in the Dollar Index. Bitcoin's recent rally has stalled, coinciding with a rebound in the Dollar Index. Broader macro risks, including elevated oil prices and the U.S.-Iran standoff, appear to support the Dollar Index's outlook.
Analysts note that these factors could pose a headwind for bitcoin's continued rally. Despite sustained inflows into U.S.-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, reaching its lowest level since March 15, with bearish implications for the ETH/BTC pair.