Data Challenges DXY Correlation to Bitcoin Rallies and Corrections

Analysts and traders strongly adhere to the "Bitcoin is inversely correlated to the strength of the US Dollar Index" thesis, but closer examination of the data suggests otherwise.

Market analysis

Currently, there seems to be a general assumption that when the value of the US Dollar increases against other major global currencies, as measured by the DXY Index, the impact on Bitcoin (BTC) is negative.

Traders and influencers have issued alerts about this inverse correlation and how the eventual reversal of the move is likely to drive the price of Bitcoin higher.

Analyst @CryptoBullGems recently looked at how overbought the DXY index looks after its Relative Strength Index (RSI) rose above 78 and could be the start of a retracement for the dollar index.< /p>

This is literally the only thing you need to look at:

$DXY is currently overbought and needs to correct. $BTC is the most sold ever on the monthly period.

BITCOIN AND THE DOLLAR SHARE AN INVERSE CORRELATION. $BTC will rise and fiat will fall. pic.twitter.com/MpZniivpj0

— The London Crypto (@SerLondonCrypto) September 6, 2022

Additionally, technical analyst @1coin2sydes shows a bearish double top formation on the DXY chart, while Bitcoin simultaneously forms a double bottom, a bullish indicator.

Very nice Inverse Correlation between the Dollar Index DXY and the Bitcoin BTC!

As #DXY forms a Double Top (possibly trend reversal) - Heading Down! #BTC forms a Double Bottom (which can also serve as a trend...