- Bitcoin rose to $26,820 on Wednesday, trading in the opposite direction to stocks as the Dollar Index hit a 10-month high.
- An easing for the DXY could see Bitcoin price strengthen above the $26k base.
Bitcoin (BTC) defied a surge for the Dollar Index (DXY) on Wednesday, spiking to above $26,820 in early US trading hours. The gains for the benchmark cryptocurrency buoyed the altcoin market, with several tokens seeing decent moves to push the total market cap up by about 1.5%.
But as the DXY, which measures the greenback’s strength against a basket of other major currencies, hit highs of 106.83 for its highest level since November 2022, stocks moved lower. Alongside the dollar’s strength has been rising yields, with the benchmark 10-year US Treasury yield soaring to a 16-year high of 4.64%. The two-year US yield rose to 5.15%
It’s a scenario that sees the stock market compound weakness seen over the past week, including Tuesday’s Dow slump that was the biggest in a single day since March.
BTC price outlook
The US dollar index’s upside has historically signaled a bearish outlook for stocks and other risk assets, including crypto. Market intelligence platform says the negative correlation between the dollar index and Bitcoin and S&P 500 has particularly been evident since 2021.
That should be the perspective, though Bitcoin is showing a resilience above $26k. According to crypto investor Scott Melker, Bitcoin’s performance shows it “has its own life.”
$BTC is currently COMPLETELY uncorrelated from every other market.
Bitcoin is up, the dollar is WAY up, stocks are down, gold is down.
Bitcoin has a life of its own.
— The Wolf Of All Streets (@scottmelker) September 27, 2023
Meanwhile, Santiment analysts say BTC could see a breakout if the DXY begins to cool off.