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US Dollar Index Rises: Will Bitcoin Prices Follow or Experience a Correction?

The US Dollar Index
DXY
is breaking out toward 101 after forming a double bottom pattern on the daily chart. Historically, this movement usually puts pressure on Bitcoin
BTCUSD
prices. However, the correlation data for 2026 shows a different story.

Bitcoin is trading around US$80,605, up 0.97% in the last 24 hours and surging 8.71% over the past 30 days. The question now is, does dollar strength still influence BTC prices, or is Bitcoin increasingly moving based on its own fundamentals?

Long-Term Inverse Correlation Still Influential

For over a decade, DXY and Bitcoin generally move in opposite directions. Data from Bitcoin Counterflow since 2011 clearly shows this pattern.

Bitcoin’s expansion phases in 2013, 2017, and 2020 occurred when DXY weakened below 90. DXY rallies in 2014, 2018, and 2022 also coincided with significant BTC declines of over 60%.

The mechanism behind this relationship is simple. A weakening dollar usually indicates looser financial conditions and increased risk appetite, and these two factors have historically boosted Bitcoin along with other risk assets.

Youtuber Carl Moon recently shared a monthly comparison chart supporting this view. The chart shows each Bitcoin halving cycle against the DXY phase.

Red blocks during BTC bull runs align with DXY declines, while green blocks during corrections show dollar strength. However, Moon’s forward-looking projection suggests both assets could rise together, indicating a potential change in their relationship.

2026 Shows a More Complex Story

Although macro analysis supports the inverse correlation, recent price movements have made the picture more complicated. The correlation between DXY and Bitcoin on the daily chart during 2026 shows a mixed situation.

At the end of January and early February, the correlation nearly reached +1.00 (blue circle). Both declined together during risk-off market repricing. The same positive correlation reappeared in mid-March and early April, with both recovering simultaneously.

Negative correlation then returned from mid-April to May (red circle). DXY rallied while BTC consolidated around US$80,000. The correlation approached -1.00, reversing the pattern from a few months earlier when they moved in opposite directions.

This sharp change aligns with structural shifts in the Bitcoin market. Inflows into spot Bitcoin exchange-traded funds (ETFs) reached US$1.97 billion in April, the strongest month of 2026.

Institutional demand now influences BTC prices, regardless of dollar movements. Meanwhile, the cycle once dominated by retail investors is much more responsive to dollar strength. That sensitivity appears to be diminishing as funds from BlackRock and other major issuers support stable demand.

DXY Price Prediction Points to 101.075

The DXY chart currently shows a clear technical scenario. The price is at 99.124 after breaking through the Fibonacci retracement 0.618 at 98.548. The W-shaped pattern throughout April and May has formed a foundation for an upward movement.

The bullish target is at 101.075, about 2% higher than the current level. This level is slightly above the supply zone at 100.393, which also represents the Fibonacci extension 1.0 and the previous March and April highs.

The breakout is also supported by momentum. The Relative Strength Index (RSI) has risen close to 60, and the Moving Average Convergence Divergence (MACD) histogram has turned green and continues to widen.

Invalidation would occur if the daily price closes below the Fibonacci 0.382 level at 97.408. This zone aligns with the green support band visible on the chart.

This scenario creates a clear test regarding the broader correlation question. If DXY breaks above 100.393 and Bitcoin remains steady or rallies, the case for a decoupling of the two assets becomes stronger.

However, if BTC drops while DXY surpasses 101, the inverse correlation will likely reassert itself, and macroeconomic factors will still be driving Bitcoin. The coming weeks will be crucial in determining whether Bitcoin has become an independent asset or continues to follow dollar movements.