Bitcoin Defies DXY Surge, Trades Opposite to Stocks

9:54 pm
September 27, 2023
  • Bitcoin reached $26,820 on Wednesday, moving in the opposite direction of stocks as the Dollar Index (DXY) hit a 10-month high.
  • If the DXY eases, it could strengthen Bitcoin’s price above its $26,000 support level.

Bitcoin (BTC) defied the surge of the Dollar Index (DXY) on Wednesday, rising above $26,820 in early US trading hours. The gains in the leading cryptocurrency also boosted the altcoin market, leading to a 1.5% increase in the total market cap.

However, as the DXY hit a high of 106.83, its strongest level since November 2022, stocks experienced a decline. Alongside the strength of the dollar, yields also rose, with the benchmark 10-year US Treasury yield at a 16-year high of 4.64% and the two-year US yield at 5.15%.

This scenario compounds the weakness in the stock market observed over the past week, including the significant drop in the Dow on Tuesday, the largest single-day decline since March.

US dollar index (DXY) chart from TradingView

Bitcoin Price Outlook

The surge in the US dollar index historically indicates a bearish outlook for stocks and other risk assets, including cryptocurrencies. Santiment, a market intelligence platform, notes the negative correlation between the dollar index, Bitcoin, and the S&P 500 index, which has been evident since 2021.

However, Bitcoin’s resilience above $26,000 suggests that it has its own independent trajectory. Crypto investor Scott Melker observed that Bitcoin is currently completely uncorrelated from other markets.

Meanwhile, analysts at Santiment suggest that Bitcoin could experience a breakout if the DXY begins to cool off.


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