Bitcoin's Negative Correlation With Dollar Index Strengthens Ahead of U.S. GDP Data

The 90-day correlation coefficient between bitcoin and the dollar index has slipped to -0.70 from -0.11 four weeks ago.

AccessTimeIconApr 27, 2023 at 11:06 a.m. UTC
Updated Apr 27, 2023 at 3:06 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global event for everything crypto, blockchain and Web3.Register Now

Bitcoin (BTC) has historically moved in the opposite direction of the U.S. Dollar Index (DXY), which gauges the greenback's exchange rate against major fiat currencies, including the euro.

The negative correlation has strengthened, reversing the brief let-up witnessed in late March, and indicating the possibility of accelerated gains in the cryptocurrency in the case of a continued dollar slide following the release of the U.S. gross domestic product data on Thursday.

The 90-day correlation coefficient between bitcoin and the dollar index has slipped to a two-month low of -0.70, according to data from charting platform TradingView. It had weakened to -0.11 four weeks ago.

Correlations are measured on a scale of -1 to +1. Values skewed toward -1 indicate that lower prices for one variable are associated with higher prices for the other.

The 90-day correlation coefficient of -0.70 suggests a notably strong negative relationship between the two assets. (TradingView/CoinDesk)
The 90-day correlation coefficient of -0.70 suggests a notably strong negative relationship between the two assets. (TradingView/CoinDesk)

Bitcoin and the DXY have been mostly negatively correlated over the past three years, except in times where crypto-specific factors overshadowed the dollar trends. For instance, bitcoin fell in late 2022 as the collapse of crypto exchange FTX kept investors from cheering weakness in the U.S. currency. A similar breakdown was seen in the lead-up to Coinbase's (COIN) Nasdaq debut in April 2021 and the launch of a futures-based exchange-traded fund in the U.S. the following October.

Focus on GDP

At 12:30 UTC, the U.S. Bureau of Economic Analysis will release its preliminary estimate of first-quarter GDP. The data is likely to show the world's largest economy grew at an annualized rate of 2.0%, a slower pace than the 2.6% growth in the fourth quarter last year, according to Reuters estimates published by FXStreet.

Several economic indicators and bond market metrics have been warning of a recession for months. The dollar index has declined by over 12% since early October in the hopes that the Federal Reserve would halt its interest-rate hikes and resort to liquidity easing to support the economy.

Besides, traders are back to pricing three interest-rate cuts by year end in the wake of issues at First Republic Bank (FRC), even though the Fed didn't cut rates and maintained a hawkish or anti-stimulus bias following the banking crisis episode of March.

With so much dovish expectations already in the air, the GDP figure might have to indicate a sharper-than-expected moderation in economic activity to trigger a deeper dollar sell-off and rally in risky assets, including cryptocurrencies.

It also means that a upbeat figure may see markets price out rate cuts and lift the dollar higher.

"The market eyes growth at 2% – shouldn't move markets too intently given the backward nature of the data point – would need to be a big beat/miss to the move rates expectations and the USD, gold, Nasdaq," Chris Weston, head of research at foreign-exchange brokerage Pepperstone, said in a tweet.

At press time, bitcoin was changing hands at $29,010, up 2% in the past 24 hours. The dollar index was little changed at 101.50.

Edited by Sheldon Reback.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.

Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to to register and buy your pass now.