Bitcoin-Dollar Index Inverse Correlation Hits Four-Year High
The U.S. Dollar Index, or DXY, measures the dollar’s strength against a basket of major currencies and often affects dollar-denominated Bitcoin, as a stronger dollar typically weighs on risk assets. The negative correlation between the two has risen to its strongest level in nearly four years, indicating that geopolitical and inflation risks are driving market capital allocation.
Bitcoin’s 30-day correlation coefficient with DXY has fallen to -0.90, its lowest level since 2022, meaning the two have recently moved in almost completely opposite directions. U.S. spot Bitcoin ETFs have continued to record inflows, although reports did not disclose the exact amount. A rebound in the dollar has stalled Bitcoin’s rally.
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The history behind this eventUS Dollar Index Nears Three-Month High as Bitcoin Decouples and Holds $68,000
A stronger U.S. Dollar Index (DXY) typically signals a shift into cash and U.S. Treasurys, often weighing on risk assets such as Bitcoin. Bitcoin’s ability to hold a key price level even as U.S. stocks and gold declined points to weaker short-term correlations. It has also prompted the market to reassess Bitcoin’s “digital gold” credentials and institutional demand for the asset.
The DXY rose to 99.4 on March 3 after climbing from 96.6 over three weeks. The Nasdaq 100 fell 1% and gold dropped 3.6%, while Bitcoin held $68,000. U.S. spot Bitcoin ETFs recorded $1.5 billion in net inflows over the seven days beginning February 24, led by demand for BlackRock and Fidelity products. Bitcoin traded at $68,316 in early Asian trading on March 23, up 1.5% over 24 hours.
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