Bitcoin Defies a Strong Dollar: Is Decoupling Underway?

Bitcoin and the US dollar rise simultaneously. Since early August, BTC has gone from around 63,000 dollars to nearly 87,000 dollars before returning to about 84,600 dollars. However, the DXY also follows an upward slope. Falling to around 98.4 in early September, the dollar index now trades above 101. An unusual situation for two assets whose movements have often been opposite.

Bitcoin holds as the dollar gains strength

In February, the strength of the dollar heavily weighed on Bitcoin and the crypto market. Seven months later, the scenario is different. Bitcoin was still around 63,000 dollars at the beginning of August. BTC then climbed to 70,000 dollars, then 80,000, before recently reaching about 87,000 dollars. It now trades around 84,600 dollars.

The dollar, however, has not remained still. The DXY had declined during much of the summer, from about 101.6 in July. In early September, it dropped to about 98.4. The trend then reversed and the index returned to 101.

Usually, the rise of the greenback is not good news for Bitcoin. A strong dollar can make alternative assets less attractive and sometimes accompanies a decline in risk appetite. This time, BTC has almost given nothing back. It remains over 20,000 dollars above its early August level.

BTC also benefits from its own drivers

DXY obviously doesn’t explain Bitcoin’s price alone. The latest sessions have reminded us quite brutally. When BTC approached 87,000 dollars, nearly a billion dollars of crypto positions were liquidated. About 900 million were short positions.

Traders betting on a decline thus inadvertently contributed to the rise by buying back their positions. Bitcoin then lost part of the gained ground. On September 24, it dropped to 83,508 dollars after failing to hold 87,000 dollars. About 583 million dollars of positions were again liquidated across the crypto market.

A lot of movement in a few days. This also complicates reading the relationship with the dollar. A correlation does not force two assets to constantly move in opposite directions. Over several cycles, BTC and DXY have experienced periods of strong negative correlation, then episodes where this relationship became much weaker.

Periods of positive correlation have even existed. The current sequence could simply be another. To speak of a real break, the dollar would need to continue rising for several weeks while Bitcoin retains its gains. Not yet.

The Fed remains in Bitcoin’s equation

The next chapter will still largely be played out in the United States. The Fed has just raised its rates by 25 basis points, bringing their range to 3.75–4%. Bitcoin, however, reacted very little in the first hours. BTC remained relatively stable around 76,300 dollars despite the decision.

A few days later, it approached 87,000 dollars. Upcoming US data on inflation, employment, and rates can still change the relationship between Bitcoin and the greenback. They directly influence the DXY, bond yields, and investors’ appetite for risky assets.

For now, the numbers remain simple. BTC is around 84,600 dollars after approaching 87,000 dollars. The DXY exceeds 101 after falling to 98.4 at the start of the month. The dollar is rising. Bitcoin still refuses to yield.