Bitcoin (BTC) vs. U.S. Dollar: Is Correlation Finally Broken?

Bitcoin has experienced a significant surge since the beginning of August, rising from about $63,000 to a recent high of about $87,000, before slightly declining to trade at about $84,600. Bitcoin has risen significantly above both its short-term and long-term moving averages, due to the steady and mostly uninterrupted movement.

Market is stabilzing

In a comparable period, the U.S. dollar index has also improved, rising from lows around 98.40 in early September to above 101.00 at the moment. This is a reversal after the index had spent the majority of the summer falling from July's highs around 101.6.

Over the last few sessions, the dollar has been growing, which has coincided with Bitcoin's ongoing surge to its own local highs. This concurrent strength is noteworthy, because Bitcoin and gold have frequently been positioned as a hedge against dollar weakness, especially during times of expectations for monetary easing or worries about fiscal policy.

Market's risky positioning

The dollar's conventional impact on cryptocurrency pricing may be outweighed by other factors, such as risk-on positioning, institutional allocation flows, or catalysts unique to Bitcoin, when both assets rise simultaneously. Nevertheless, a single overlapping rally does not always indicate a structural break in correlation.