Bitcoin and dollar rise together, raising questions over inverse correlation

Bitcoin and the U.S. dollar have recently strengthened at the same time, prompting speculation that the traditional inverse correlation between the two assets may be wavering. Analysts say it is too early to conclude that a brief period of joint gains marks a long-term shift in correlation.

On Sept. 27 (local time), blockchain media outlet U.Today reported that bitcoin climbed from about $63,000 in early August to around $87,000, then eased slightly to trade at about $84,600. After a steady rise without a major correction, bitcoin is well above both its short- and long-term moving averages.

Over the same period, the U.S. dollar index (DXY) also strengthened. DXY fell to about 98.40 in early September but has recently moved above 101.00. The dollar index, which rose to about 101.6 in July and then declined for most of the summer, has turned higher again.

In several recent sessions, the dollar strengthened while bitcoin pushed its own highs higher. The move is notable because bitcoin and gold have typically been viewed as hedges against dollar weakness. That tendency was particularly pronounced when expectations for monetary easing rose or concerns about fiscal policy increased.

Still, the fact that bitcoin and the dollar rose at the same time is not enough to conclude that their existing relationship has structurally broken down. Risk-on sentiment, institutional asset allocation and bitcoin-specific drivers may have temporarily outweighed the dollar's traditional influence on cryptocurrency prices.