For Bitcoin For traders, the direction of the U.S. Dollar Index (DXY), which measures the greenback’s strength against a basket of other currencies, has not been that important over the past four years.
That’s because the 30-day correlation between the two is currently -0.90, the most negative since September 2022, according to TradingView. Readings below 0 indicate an inverse relationship: when the U.S. dollar weakens, Bitcoin rises and vice versa.
But keep in mind that this reading, while widely tracked, may be affected by Bitcoin’s 24/7 trading structure, especially weekend price action, which is not reflected in the USD Index’s weekday trading only.
The coefficient of determination, or correlation squared, is 0.81, which means that approximately 81% of Bitcoin’s short-term price movements are statistically correlated with index movements.
Notably, Bitcoin’s rally has stalled since hitting highs above $79,000 on Wednesday. Meanwhile, the U.S. dollar index rebounded to 98.75 from a low of 97.63 on April 17.
This is an excerpt from CoinDesk’s newsletter “Daybook.” If you haven’t registered yet, please register here.
The outlook for the U.S. dollar index appears to be underpinned by broader macro risks, including rising oil prices related to tanker shipping disruptions in the Strait of Hormuz and the ongoing impasse in U.S.-Iran ceasefire talks.
“Macro is still trying to rely on it [BTC’s continued rally]. Oil prices rose for a fifth consecutive session, with restrictions remaining in effect in the Strait of Hormuz. 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 positive is continued inflows into U.S.-listed cash exchange-traded funds (ETFs). While these factors have supported prices, industry leaders remain cautious.
SkyBridge Capital founder Anthony Scaramucci said that Bitcoin may not see a meaningful recovery until October or November, and the current price trend is consistent with BTC’s four-year reward halving cycle. He said whales and long-term holders holding large amounts of BTC continue to sell off ETF-driven demand. Stay alert!
Read more: For analysis of today’s altcoin and derivatives activity, see Today’s Cryptocurrency Market. For a complete list of this week’s events, see CoinDesk’s “Crypto Week Ahead.”
what is trend
- Pentagon emails propose suspending Spain’s membership of Nato, reassessing British claims to Iran war-torn Falklands (Reuters): A memo circulating among top Pentagon officials lays out options for punishing Nato allies who deny access, bases and overflight rights to Iranian operations.
- Morgan Stanley launches Stablecoin Reserve Portfolio, an issuer-focused money market fund (CoinDesk): Morgan Stanley Investment Management launched MSNXX, a $1 NAV government money market fund that holds only Treasury securities and government repurchase agreements and is designed to meet Genius Act reserve requirements.
- Wisconsin sues Kalshi, Coinbase, Polymarket, Robinhood and Crypto.com over prediction markets (CoinDesk): Attorney General Josh Kaul complained that sports contracts are unlicensed gambling and cited the platforms’ own marketing practices.
- The U.S. Department of Justice has arrested a Special Forces soldier who made $400,000 betting on Maduro’s capture on Polymarket (ABC News): The sergeant major was involved in the January operation and bet about $33,000 hours before Trump announced Maduro’s capture, netting him more than $400,000. This is believed to be the first insider trading prosecution related to prediction markets in the United States.
today’s signal
This chart shows the daily fluctuations in the Ethereum to Bitcoin (ETH/BTC) ratio since last July in candlestick format.
This week, the ratio fell nearly 3% to 0.02965, its lowest level since March 15. This move has two bearish implications.
First, it confirms a downside breakout of the short-term ascending channel that guided the economy’s recovery from the early February lows. 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 further declines or an extended consolidation in the ETH/BTC pair, that is, it signals continued underperformance of Ethereum relative to Bitcoin.
