Bitcoin-dollar correlation falls to lowest level since 2022
Bitcoin and the U.S. dollar have recently shown an almost perfectly inverse relationship, a level of negative correlation not seen in nearly four years. The 30-day correlation between Bitcoin and the U.S. Dollar Index (DXY) has dropped to -0.90, the lowest reading since 2022.
Highlights
- The 30-day correlation between Bitcoin and the U.S. Dollar Index reached -0.90, the lowest since 2022.
- Around 81% of Bitcoin’s recent short-term price moves are linked to DXY fluctuations.
- Bitcoin’s upward momentum has stalled after hitting above $79,000 amid a stronger dollar.
Record Inverse Correlation
According to CoinDesk, approximately 81% of Bitcoin’s short-term price movements over the past month can be statistically explained by shifts in the dollar index. As the dollar strengthened, Bitcoin’s rally stalled after reaching above $79,000 on Wednesday.
The DXY rebounded from a low of 97.63 on April 17 to 98.75, supported by geopolitical risks, higher oil prices due to tensions in the Strait of Hormuz, and renewed inflation concerns. This macroeconomic pressure has weighed on risk assets, including Bitcoin.
Cautious investor sentiment
Despite continued inflows into U.S. spot Bitcoin ETFs, large investors remain cautious. Anthony Scaramucci of SkyBridge Capital suggested that a more meaningful Bitcoin recovery may not materialize until later this year. Ethereum continues to lag behind Bitcoin on key technical indicators.
Analysts note that Bitcoin’s 24/7 trading structure, particularly price action during weekends when the DXY is not actively traded, can also influence its performance relative to the dollar.
What it means for the market
This extreme inverse relationship highlights Bitcoin’s increasing sensitivity to macroeconomic factors and the strength of the US dollar. As long as the dollar remains supported by geopolitical and inflation risks, significant upside for Bitcoin may be limited.
Investors should be aware that short-term movements in Bitcoin will likely continue to be heavily influenced by developments in the broader currency and macroeconomic landscape.
It was earlier reported that BTC and ETH face pressure ahead of major options expiry.
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