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 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 this reading may be influenced by bitcoin's continuous trading structure, particularly during weekends when the Dollar Index is not traded.
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 macro factors are still leaning against bitcoin's continued rally, citing the rise in oil prices and the constraints in the Strait of Hormuz as headwinds that could keep inflation alive and risk premia from fully unwinding. Meanwhile, sustained inflows into U.S.-listed spot exchange-traded funds (ETFs) have helped support prices, but industry leaders remain cautious.
Anthony Scaramucci, founder of SkyBridge Capital, predicts that bitcoin may not experience a meaningful recovery until October or November, aligning with the cryptocurrency's four-year reward halving cycle. The current price action is also being influenced by whales and long-time holders selling into ETF-driven demand.