DXY's Rampage Restarts... Can Bitcoin Withstand the Strong Dollar Shock?

▲ Bitcoin (BTC), Dollar (USD)

As the Dollar Index (DXY) formed a double-bottom structure on its daily chart and aimed to break through the 101 line, a macroeconomic variable warning light has once again been triggered for Bitcoin (BTC) prices. In the past, a strong dollar repeatedly led to a weak Bitcoin, but analysis suggests that in the 2026 market, the inflow of Bitcoin spot ETF funds combined with institutional demand is shaking the existing correlation.

According to BeInCrypto on May 16 (local time), the Dollar Index formed a double-bottom on its daily chart and is showing a breakout trend towards the 101 line. The Dollar Index traded at 99.124, having surpassed the Fibonacci 0.618 retracement level of 98.548. The W-shaped structure formed throughout April and May was presented as the technical basis for this rise.

The upside target for the Dollar Index was presented as 101.075. This is approximately 2% higher than current levels, and it sits just above the 100.393 supply zone, where the Fibonacci 1.0 extension and previous highs from March and April converge. The Relative Strength Index (RSI) has risen to around 60, and the Moving Average Convergence Divergence (MACD) histogram has turned green and is expanding, interpreted as signals supporting the strong dollar trend.

As of the time of writing, Bitcoin was trading around $80,605, having risen 0.97% over 24 hours and 8.71% over the past 30 days. BeInCrypto pointed out that the key issue is whether a strong dollar continues to pressure Bitcoin's price, or if Bitcoin has begun to show independent movement based on its own supply-demand dynamics and fundamentals.

In long-term trends, the inverse correlation between the Dollar Index and Bitcoin still holds sway. Bitcoin's expansion phases in 2013, 2017, and 2020 coincided with periods when the Dollar Index was weak, below 90. Conversely, Dollar Index surges in 2014, 2018, and 2022 were accompanied by Bitcoin plummeting by over 60%. A weak dollar has historically been favorable for Bitcoin, signifying accommodative financial conditions and a preference for risk assets.

However, the trend in 2026 is more complex. In late January and early February, the correlation between the Dollar Index and Bitcoin approached a positive 1.00, with both assets declining together, and they also recovered together in mid-March and early April. Subsequently, from mid-April to May, while the Dollar Index rose, Bitcoin consolidated around $80,000, showing an inverse correlation approaching negative 1.00 once again.

BeInCrypto analyzed that Bitcoin spot ETF fund flows are a key variable in these changes. In April, Bitcoin spot ETFs saw an inflow of $1.97 billion, marking the strongest monthly flow in 2026. This suggests that as institutional demand begins to independently influence Bitcoin's price, its sensitivity to a strong dollar is decreasing compared to past cycles dominated by retail investors. If Bitcoin holds or rises even as the Dollar Index surpasses 100.393, the decoupling argument gains strength. Conversely, if Bitcoin experiences selling pressure as the Dollar Index approaches 101, the old inverse correlation structure will once again dominate the market.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*