Competition Between Bitcoin and Dollar Is Ending! Analysts Said Inverse Correlation May Be Broken, Shared Bullish Signal for Both BTC and Dollar!

Historically, Bitcoin and the Dollar Index (DXY) have maintained a largely negative correlation. This means that when the dollar strengthens (DXY increases), Bitcoin tends to fall in value, and conversely, when DXY falls, Bitcoin tends to rise. However, analysts predict that this could change and return to a positive correlation.

Bitcoin- Dollar Index (DXY) Correlation May Turn Positive!

At this point, analysts noted that as a result of option pricing, the negative correlation between Bitcoin and DXY could break down and turn positive around the US election time.

Options data from the Chicago Mercantile Exchange shows the one-month BTC call-ask curve at 1.2, indicating a bullish trend for Bitcoin over the next four weeks, analysts told Coindesk.

Analysts also noted that the 30-day risk reversal in the Euro-Dollar (EUR/USD) pair is at -0.39, indicating a stronger dollar, adding that “options are signaling a continued rise in the dollar index, one of BTC’s biggest enemies.”

When all this data is evaluated together, analysts stated that Bitcoin has started to ignore the dollar index, the data points to an increase for Bitcoin and the dollar, and is a signal that the correlation between DXY and BTC may turn positive.

Speaking to Coindesk, Zerocap’s Chief Investment Officer Jonathan de Wet said that investors are taking long positions as the likelihood of a Trump win increases and that they expect Bitcoin to continue its rise towards $70,000 in the coming weeks.

Wet also noted that despite the increasing strength of the dollar, BTC has started to decouple from the DXY, with investors increasingly focusing on higher prices, namely $80,000 and $100,000 call options.

Finally, analysts at FRNT Financial also noted that the US elections have emerged as a dominant narrative for Bitcoin and cryptocurrencies in the last six months and are one of the main factors in the rise.

*This is not investment advice.

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