Bitcoin Sees Strengthened Negative Correlation With Dollar Ahead of U.S. GDP Data
• Bitcoin and the U.S. Dollar Index have a negative correlation, meaning when one increases in value, the other decreases.
• The 90-day correlation coefficient between bitcoin and the dollar index has dropped to -0.7 from -0.11 four weeks ago, indicating an increased negative relationship between the two assets.
• Factors like FTX’s collapse, Coinbase’s Nasdaq debut, and the launch of a futures-based ETF have caused temporary spikes in bitcoin’s price despite its negative correlation with the dollar index.
Negative Correlation Between Bitcoin and Dollar
Bitcoin (BTC) has traditionally moved in opposition to the U.S. Dollar Index (DXY), which tracks exchange rates for major fiat currencies against the greenback. Recently, this negative relationship has become even stronger after a brief letup in late March, suggesting that if the dollar continues to fall following Thursday’s U.S. GDP data release, bitcoin may experience accelerated gains as a result of its inverse relationship with it.
The 90-day correlation coefficient between BTC and DXY has now dropped to -0.70—the lowest it’s been in two months—according to data from charting platform TradingView; it was at -0.11 four weeks ago. Correlations are measured on a scale of -1 to +1; values skewed toward -1 indicate that lower prices for one variable are associated with higher prices for the other—in this case, bitcoin rising as the DXY falls or vice versa .
Previous Market Interruptions
Over the past three years, BTC and DXY have been mostly negatively correlated except in times where crypto-specific factors overshadowed dollar trends; for instance, when FTX collapsed or when Coinbase launched its Nasdaq debut or futures-based ETF last year .
Impact of U.S GDP Data Release
The release of Thursday’s U.S GDP data could further entrench bitcoin’s already strong negative correlation with the DXY should it continue its downward trend following said release; this would likely cause accelerated gains in bitcoin as a result of their inverse relationship .
Given their inverse relationship, any continued decline in value of USD could lead to an increase in value for BTC as investors flock away from traditional markets into cryptocurrency investments such as Bitcoin due to its potential store of value capabilities during times of economic uncertainty..