Is a Bitcoin bull run starting as the Dollar Index loses momentum?
The seemingly inverse relationship between Bitcoin and DXY have never lasted more than 7 weeks. The correlation indicator runs from -100%, indicating that certain markets move in opposite ways, to 100%, indicating that the movement is in lockstep; 0 represents a total lack of correlation between the two assets.The metric has been negative for 81% of the past 670 days, indicating that DXY and Bitcoin have generally followed an inverse trend.
Between June 2021 and November 2021, the DXY and BTC price presented a very similar pattern as both rallied during that five-month period.launch on October 19, 2021.But regardless of the rationale behind the move, correlation is not causation, meaning it is impossible to conclude that DXY’s positive performance affected Bitcoin price during the period.Longer-term analysis still required for DXY
But the price signals on the Bitcoin market are more immediate as coins are traded 24/7. So the price movements are extremely susceptible to news, macroeconomic data, and geopolitical events, with reverberating effects for weeks and even months.Dollar Index DXY vs. Bitcoin , 2022. Source: TradingView
Moreover, even when the inverse correlation happens, there may be a gap between Bitcoin's immediate price action and the longer term trends of the Dollar Strength Index.
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