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- The U.S. dollar index reached its highest level since November 2022.
- BTC’s correlation with DXY was just around 0.11 at the time of publication.
The U.S. dollar index (DXY) has risen a few notches higher, boosted by the Federal Reserve’s signals that one more interest rate hike was imminent before 2023-end.
How much are 1,10,100 BTCs worth today?
In fact, according to a TradingView chart, the rally has been going on for the past two months. The index, which measures USD’s strength against a basket of six foreign currencies, hit its highest level in the last ten months at the time of writing.
Source: Trading View/U.S. Dollar Index
Bitcoin immune to USD’s rise
Historically, the USD, considered a safe haven, has had an inverse correlation with supposedly risky assets like stocks and cryptocurrencies. However, recent developments appeared to contradict this pattern. At least, partially.
According to on-chain analytics platform Santiment, while the USD has shot up, Bitcoin [BTC] has held steady in the recent weeks. The king coin has wiggled in and around the $26,000-level for most parts, as shown below.
Source: Santiment
To the contrary, major stock indices like the S&P 500 experienced a significant drop, thereby staying true to the historical tendencies.
Spotting Bitcoin’s resilience in a worsening macroeconomic environment, Santiment heightened the possibility of BTC breaking out of ongoing tight trading ranges once DXY’s rally fades.
Decoupling from TradFi markets
As per another popular on-chain research firm IntoTheBlock, Bitcoin’s relation with traditional finance indicators flipped drastically in recent weeks
BTC’s correlation with DXY was just around 0.11 at the time of publication. In fact, a week ago, it was zero. Needless to say, the decoupling played a part in insulating BTC from DXY’s rally.
Source: IntoTheBlock
Moreover, BTC’s relation with bellwethers of the U.S. financial market—Nasdaq 100 and S&P 500—turned negative. This implied that if the price of one asset rallies, the other one falls and vice versa.
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Now, for most parts of its existence, BTC has been labeled as a “risky asset” and clubbed with the stock market. However, the negative correlation could effectively project it as a safe haven, akin to Gold.
At the time of writing, BTC exchanged hands at $26,411, per Santiment. Given its stability in the face of a rising dollar, investors’ sentiment swung from negative to positive for the king coin.
Source: Santiment