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▲ Bitcoin (BTC), Dollar (USD)/ChatGPT Generated Image
As the Dollar Index (DXY) rises towards 101, Bitcoin's (BTC) long-standing 'weak dollar beneficiary formula' is once again being put to the test.
According to BeInCrypto on May 16 (local time), the Dollar Index showed an upward trend after completing a double bottom on the daily chart. The technical target was set at 101.075. In the long term, the dollar and Bitcoin generally moved in opposite directions. Bitcoin bull markets in 2013, 2017, and 2020 coincided with periods when the Dollar Index fell below 90. Conversely, during dollar strength in 2014, 2018, and 2022, Bitcoin plummeted by over 60%.
However, since 2026, the movements of the two assets have not been as simple as in the past. In late January and early February, both the dollar and Bitcoin fell together, and from mid-March to early April, they simultaneously rebounded. Subsequently, from mid-April to May, the inverse correlation strengthened again. Bitcoin traded sideways near $80,000 while the dollar rose.
BeInCrypto analyzed that institutional funds through Bitcoin spot ETFs have emerged as a variable changing price trends. In April, US Bitcoin spot ETFs saw a net inflow of $1.97 billion, the largest monthly net inflow since 2026. This suggests that as the influence of institutional funds grows compared to a market previously dominated by retail investors, Bitcoin's sensitivity to dollar movements is decreasing.
On the Dollar Index chart, after breaking through the Fibonacci 61.8% retracement line at 98.548, 101.075 was presented as the upward target. A major resistance zone is located at 100.393. The Relative Strength Index rose towards 60, and the Moving Average Convergence Divergence also showed an upward trend. Conversely, if the daily closing price falls below the Fibonacci 38.2% retracement line at 97.408, this bullish scenario loses momentum.
The key going forward is how Bitcoin will move when the Dollar Index surpasses 100.393. If Bitcoin maintains its strength, it could reinforce the analysis that the traditional inverse correlation between the two assets has weakened. Conversely, if Bitcoin shows weakness as the dollar rises towards 101, it would confirm the past inverse correlation trend.
[Key Summary of Article]
-The Dollar Index broke through a double bottom, indicating an upward signal towards the technical target of 101.075.
-Bitcoin and the dollar showed an inverse correlation in the long term, but in 2026, periods where both assets moved together also recurred.
-In April, a net inflow of $1.97 billion into US Bitcoin spot ETFs emerged as institutional demand became a variable changing the relationship between the dollar and Bitcoin.
*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.*
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