for bitcoins For traders, the direction of the dollar index (DXY), a measure of the dollar’s strength against a basket of other currencies, hasn’t mattered as much in nearly four years.
This is because the 30-day correlation coefficient between the two now stands at -0.90, according to TradingView, the most negative reading since September 2022. A reading below 0 indicates an inverse relationship: when the dollar weakens, bitcoin gains and vice versa.
However, note 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 weekday-only dollar index trading.
The coefficient of determination, or squared correlation, is 0.81, implying that approximately 81% of bitcoin’s short-term price movements are statistically associated with movements in the index.
Notably, bitcoin’s rally has stalled since hitting highs above $79,000 on Wednesday. This comes as the DXY bounced 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 elevated oil prices linked to disruptions to tanker traffic in the Strait of Hormuz and a continuing standoff between the United States and Iran over ceasefire negotiations.
“Macro is still trying to lean on it [BTC’s continued rally]. Oil has risen for five consecutive sessions and Hormuz remains effectively capped. “That should be a headwind because it keeps the inflation channel alive and prevents risk premiums from completely unraveling,” Marex analysts said in an email.
One positive is the sustained inflows into US-listed spot exchange-traded funds (ETFs). While this keeps prices supported, industry leaders continue to take a cautious approach.
Anthony Scaramucci, founder of SkyBridge Capital, said that Bitcoin may not see a significant recovery until October or November, and that the current price action aligns with BTC’s four-year rewards halving cycle. He said that whales, who hold large amounts of BTC, and long-time holders have continued to sell to meet demand driven by ETFs. Stay alert!
Read more: For an analysis of current activity in altcoins and derivatives, see Crypto Markets Today. For a complete list of this week’s events, check out CoinDesk’s “Crypto Week Ahead.”
What is trend?
- Pentagon email suspends Spain from NATO and reassesses UK claim to Falklands over breaking war with Iran (Reuters): A memo circulating at senior levels in the Pentagon sets out options for punishing NATO allies who denied access, basing and overflight rights for Iran’s campaign.
- Morgan Stanley Launches Stablecoin Reserves Portfolio, a Money Market Fund for Issuers (CoinDesk): Morgan Stanley Investment Management launched MSNXX, a $1 NAV government money market fund containing only Treasury bonds and government repos, created to meet Genius Act reserve requirements.
- 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.
- Justice Department Arrests Special Forces Soldier Who Won $400,000 at Polymarket Betting on Maduro’s Capture (ABC News): The master sergeant was involved in the January operation and placed about $33,000 in bets hours before Trump announced the capture, winning more than $400,000. This is believed to be the first insider trading prosecution in the United States linked to a prediction market.
Today’s sign
The chart shows daily swings in the ether-bitcoin (ETH/BTC) ratio in candlestick format since July last year.
This week, the index fell almost 3% to 0.02965, its lowest level since March 15. The measure has two bearish implications.
First, it confirms a downward break of the short-term ascending channel that had guided the recovery from the lows of early February. Second, it pushes the ratio back below the broader downtrend line that has defined the decline since August.
This breakdown reinforces the bearish momentum and increases the likelihood of a further decline or extended consolidation in the ETH/BTC pair, i.e. pointing to continued underperformance of ether relative to bitcoin in the future.
