For Bitcoin For traders, the direction of the Dollar Index (DXY), a measure of the greenback’s strength against a basket of other currencies, hasn’t mattered this much in nearly four years.
Indeed, according to TradingView, the 30-day correlation coefficient between the two now stands at -0.90, the most negative reading since September 2022. A reading below 0 indicates an inverse relationship: when the dollar weakens, bitcoin gains, and vice versa.
Keep in mind, however, that the reading, while widely followed, may be influenced by Bitcoin’s 24/7 trading structure, particularly weekend price action that is not reflected in the Dollar Index’s weekday trading.
The coefficient of determination, or squared correlation, stands at 0.81, implying that approximately 81% of Bitcoin’s short-term price movements are statistically associated with index movements.
Notably, bitcoin’s rally has stalled since hitting a high above $79,000 on Wednesday. This comes as the DXY rebounded to 98.75 from the April 17 low of 97.63.
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The outlook for the dollar index appears supported by broader macroeconomic risks, including rising oil prices linked to disruptions to tanker traffic in the Strait of Hormuz and the continued standoff between the United States and Iran over ceasefire negotiations.
“Macro always tries to rely on [BTC’s continued rally]. Oil has risen for five consecutive sessions and Hormuz remains effectively under stress. This should be a headwind as it keeps the inflation channel alive and prevents risk premiums from fully unwinding,” Marex analysts said in an email.
One bright spot is the continued influx into US-listed cash exchange-traded funds (ETFs). Even though these measures keep prices at a sustained level, industry leaders remain cautious.
Anthony Scaramucci, founder of SkyBridge Capital, said Bitcoin may not see a significant recovery until October or November, and that current price action aligns with BTC’s four-year reward halving cycle. He said whales, who hold a large number of BTC, and long-time holders continued to sell on demand from ETFs. Stay vigilant!
Read more: For analysis of current altcoin and derivatives activity, see Crypto Markets Today. For a full list of this week’s events, check out CoinDesk’s “Crypto Week Ahead.”
What is the trend
- Pentagon email suspends Spain from NATO, reevaluates UK claim to Falklands over Iran war (Reuters): A memo circulating at high levels at the Pentagon lays out options for punishing NATO allies who have denied access, basing and overflight rights for the Iranian campaign.
- Morgan Stanley Launches Stablecoin Reserves Portfolio, a Money Market Fund for Issuers (CoinDesk): Morgan Stanley Investment Management has unveiled MSNXX, a $1 NAV government money market fund holding only Treasury bonds and government pensions, designed to meet the reserve requirements of the Genius Act.
- Wisconsin sues Kalshi, Coinbase, Polymarket, Robinhood and Crypto.com over prediction markets (CoinDesk): Attorney General Josh Kaul’s complaints allege sporting event contracts are unlicensed gambling, citing the platforms’ own marketing.
- DOJ arrests special forces soldier who won $400,000 on Polymarket betting on Maduro’s capture (ABC News): The master sergeant was involved in the January operation and placed approximately $33,000 in bets hours before Trump announced the capture, winning more than $400,000. This would likely be the first insider trading prosecution in the United States related to a prediction market.
Signal of the day
The chart shows the daily fluctuations of the ether-bitcoin (ETH/BTC) ratio in candlestick form since July last year.
This week, the ratio fell almost 3% to 0.02965, its lowest level since March 15. This decision has two bearish implications.
First, it confirms a downward break from the short-term ascending channel that had guided the recovery from the early February lows. Second, it brings the ratio back below the broader downtrend line that defines the decline since August.
This break strengthens the bearish momentum and increases the likelihood of a further decline or prolonged consolidation of the ETH/BTC pair, i.e. it indicates continued underperformance of ether against bitcoin in the future.
