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BTC Bitcoin and U.S. dollar index rebound simultaneously: Traditional negative correlation logic is challenged
Since early August, Bitcoin has shown strong upward momentum, climbing from US$63,000 to recent highs of nearly US$87,000, and then falling back slightly to about US$84,600. Currently, the price of the cryptocurrency is still well above its short-term and long-term moving averages, reflecting the persistence of upward momentum in recent weeks and limited retracement.
The recovery of the U.S. dollar index resonates with Bitcoin
At the same time, the U.S. dollar index (DXY) also showed significant gains. The index rebounded strongly after hitting a low near 98.40 in early September and is now trading above the 101.00 mark. This marks a reversal in the index's trend-the dollar index went through a downward cycle this summer after hitting a high of 101.6 in July.
Recent market transactions show that the US dollar and Bitcoin have strengthened at the same time. This synchronized movement is particularly prominent because bitcoin and gold are often seen as safe-haven assets in times of weak dollar, especially when markets expect a shift in monetary policy or express concerns about fiscal stability.
Conventional wisdom holds that Bitcoin is negatively correlated with the U.S. dollar, but the current simultaneous rise of the two suggests there may be other drivers. Analysts pointed out that increased risk appetite, buying of institutional funds and Bitcoin's unique catalyst have contributed to this unusual synergy.
Still, some market observers warn that broad conclusions should not be drawn from just one overlapping rally. They point out that short-term positive correlations have occurred periodically in the history of cryptocurrencies, but these periods have generally not changed long-term negative correlations.
Over longer periods of time, the relationship between Bitcoin and the U.S. dollar index repeatedly alternates between weakening and strengthening correlations, with the overall trend generally remaining negative. The short periods of positive correlation in the past will eventually fade away, returning historical patterns.
If Bitcoin and the US dollar index continue to rise in parallel in the next few weeks, this will be a signal worthy of attention. Analysts suggest that if the dollar continues to climb and Bitcoin either maintains its gains or enters a correction phase, this could signal a more significant shift in market dynamics.
The recent synchronized rebound in Bitcoin and the U.S. index has led some analysts to believe that institutional capital flows and unique bitcoin-specific events may be temporarily overpowering the traditional negative correlation between the two markets.
Focus on macro catalysts for the future
Looking forward, traders and investors are expected to pay close attention to the Federal Reserve's comments, the release of key inflation data, and changes in global market sentiment. These factors may provide further clues to whether Bitcoin's current rise can continue independently of the trajectory of the dollar, or whether long-term negative correlations may reappear.
The direction of upcoming economic data and central bank signals will play a decisive role in determining the durability of Bitcoin's rebound during a period of strong dollar.
