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, 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 correlation, particularly during weekends when the Dollar Index is not trading. The coefficient of determination suggests that about 81% of bitcoin's short-term price movements are statistically linked to changes in the Dollar Index.
Recently, bitcoin's rally has stalled after reaching highs above $79,000, coinciding with a bounce in the Dollar Index. The outlook for the Dollar Index is supported by broader macro risks, including elevated oil prices and geopolitical tensions. Analysts believe that these factors could pose a headwind for bitcoin's continued rally, with one expert predicting that a meaningful recovery may not occur until October or November.
Despite this, sustained inflows into U.S.-listed spot exchange-traded funds are helping to support prices. The ether-bitcoin ratio has also fallen to its lowest level since March 15, breaking down from a short-term ascending channel and reinforcing bearish momentum, which could lead to further underperformance of ether relative to bitcoin.