With the US presidential election approaching, Bitcoin’s historically inverse relationship with the Dollar Index (DXY) is being reexamined.
Bitcoin’s Negative Correlation with the Dollar Index Is Shaking Ahead of the Election
Market signals suggest that this long-standing dynamic could be changing, with investors eager to take bullish positions on Bitcoin (BTC) despite expectations of a stronger dollar.
Bitcoin Expects Rise Despite Dollar Strength
Options data from the Chicago Mercantile Exchange (CME) shows that one-month 25-delta BTC risk reversals (a measure of the premium paid for call and put options) currently stand at 1.20, indicating a bullish trend for Bitcoin over the next four weeks. Buyers of call options typically expect a rally in the market, while buyers of put options seek to hedge against downside risk.
Meanwhile, risk reversals for contracts expiring around the Nov. 8 election date on crypto options exchange Deribit also mirror call preference, according to Amberdata data.
DXY Components in Downtrend
In contrast, forex options on the euro-dollar (EUR/USD) pair, a key DXY component, are trending lower, with a 30-day risk reversal value of -0.39, indicating continued dollar strength. A similar pattern is observed in GBP/USD options.
Bitcoin Defies DXY Trends
Bitcoin rose to nearly $68,000, its highest level since July 29, even as the Dollar Index remained steady above the 103.00 level and is up 3% since late September, according to TradingView data.
This suggests that Bitcoin has begun to decouple from the Dollar Index, and this trend may become even more pronounced as the US elections approach.
