Bitcoin Shows Strange Correlation With USD Index and Treasury Yield, What’s Ahead?

The selling pressure in Bitcoin continues to send jitters across the broader cryptocurrency market. In the last 24 hours, the BTC price has tanked another 3% going all the way lower to $63,500. A large part of the recent Bitcoin price movement comes on the backdrop of the current macro setup. Interestingly, Bitcoin has been showing a strange correlation with the Dollar Index and Treasury Yield recently.

Bitcoin vs USD Index

It’s often said that the Bitcoin price movement is inversely correlated to the Dollar Index (DXY), however, this relationship is more nuanced in the way we observe it. While analyzing the long-term data, both – the Dollar Index and Bitcoin price – have appreciated over the past decade, hinting at the broader trend of increase in both assets.

However, technically, Bitcoin always tends to decline during the upward phase in the Dollar Index and rises significantly with the downtrend and the sideways movement in DXY. The more interesting thing is that Bitcoin has been showing an inverse correlation with the US stock market which is a bit strange.

Usually, Bitcoin and stock markets move in tandem since both – Bitcoin and equity – fall under the risk assets category.

As per data from IntoTheBlock, despite the stock market reaching new highs, both – Bitcoin and Ether – have declined more than 10% from their yearly peaks. This sell-off has spread across the crypto market with altcoins like Solana (SOL), Cardano (ADA), and Chainlink (LINK), experiencing even steeper drops and falling over 25% from their recent highs.

Despite the stock market reaching new highs, Bitcoin and Ether have declined over 10% from their yearly peaks.

Other major cryptocurrencies like $SOL, $ADA, and $LINK have seen even steeper drops, falling more than 25% from their recent highs. pic.twitter.com/NET1hMjr86

— IntoTheBlock (@intotheblock) June 21, 2024

Also Read: Here’s When Bitcoin (BTC) Price Recovery Will Start This Year

Global Liquidity Setting Stage for BTC Price Rally

After a period of monetary tightening, recent data shows that the Global liquidity is rising once again setting the stage for the BTC price rally ahead. The Global Liquidity Index has consistently reflected Bitcoin’s highs and lows, indicating a significant rally ahead in 2025.

Courtesy: Financial Times

As we can see from the above chart, Global liquidity has just started expanding and BTC and equities are still trading at pretty decent higher levels. It’s just a matter of time that we see big green candles in Bitcoin.

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