The key takeaways
BitcoinBTCThe US Dollar Index DXY, which measures the strength of the US dollar against major foreign currencies, has an historically inverse correlation with the.
The correlation between the DXY and Bitcoin fluctuates over time. On Friday, Bitcoin fell below $114,000 while DXY rose to its highest point in nearly two months.
The US dollar has reversed its direction, and is now showing signs of weakness. Traders will be watching to see if Bitcoin can reclaim $120,000.
DXY was down to 98.5 last Wednesday. It failed to recover the 100-level on Friday. A US employment report that was weaker than anticipated for July led traders to bet on the Federal Reserve cutting interest rates multiple times, reducing the dollar’s advantage in yield. according Bloomberg.
Reuters is also available noted As the US implemented new import tariffs against dozens of trading partners, this could raise prices at home and increase pressure on the policy.
Bitcoin can rise in value if the USD weakens, but fears of recession will cap gains.
You can get a softer dollar by buying a softer US currency supportive for Bitcoin’s priceInvestors may react in the opposite way if they anticipate a slowdown of economic activity or become risk-averse.
Bitcoin dropped from $67,000 to just $53,000 in early September, after failing to maintain a price above that level.
The ICE BofA high yield option-adjusted spread is one way that analysts can measure market sentiment. It’s a measure for the additional compensation that investors want over and above risk-free interest rates when they hold lower-rated corporate debt.
Spreads are a combination of credit and debit. liquidity risksIt is widely used as a proxy to measure risk appetite. An increased reading signifies greater caution on the market, while a reduced reading implies that investors are willing to accept more risk.
Spreads spiked in 2024 August and Septembre, coinciding both with the weakening of the US dollar and a fall in Bitcoin’s price. It dropped to 2.85 at the end of July 2025, after reaching a high of 4.60 back in April. Bitcoin also rose from its April 7 low of $74,500 to reach this decline, showing how a better credit outlook can help risk assets.
Related: Bitcoin may still have steam for $250K this year: Fundstrat’s Tom Lee
US Corporate bond assets total 11.4 trillion dollars. according SIFMA Research is a major influence in the economic world.
Spreads that are higher mean companies will pay more when they refinance existing debt, or issue new bonds. A higher capital cost can lead to lower expectations of earnings, which could trigger a negative loop on investor sentiment.
BTC bulls are likely to be put off by rising borrowing costs
Traders may move funds to short-term US Treasurys, or they might seek out higher returns overseas. This could lead the dollar’s value to fall.
The spread is currently near 3. It sits very close to the 200-day moving mean, which suggests neither an excessively pessimistic nor optimistic market position.
The recent DXY drop is not a sign that Bitcoin’s price will soon reach $120,000. Uncertainty about US labor market conditions The impact of trade tensions around the world, and in particular the reliance the tech industry has on AI-based data processing units imported from abroad, continues to have a negative effect on short-term prospects.
This is not intended as investment or legal advice. These are solely the opinions, views, and thoughts of the author and may not reflect the opinions and views of Cointelegraph.
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Source: cointelegraph.com
