Bitcoin (BTC) has fallen 12% since March 2, when it nearly reached $94,000. Interestingly, during the same period, the US dollar weakened against a basket of foreign currencies, which is usually seen as a positive sign for scarce assets like BTC.
Investors are now puzzled as to why Bitcoin hasn’t reacted positively to the declining DXY and what could be the next factor to trigger a decoupling from this trend.
US Dollar Index (DXY, left) vs. Bitcoin/USD (right). Source: TradingView / Cointelegraph
Up to mid-2024, the US Dollar Index (DXY) had an inverse relationship with Bitcoin’s price, meaning the cryptocurrency often rose when the dollar weakened. During that time, Bitcoin was widely viewed as a hedge against inflation, thanks to its lack of correlation with the stock market and its fixed monetary policy, similar to digital gold.
However, correlation does not imply causation, and the past eight months