The U.S. Dollar Index (DXY) is used to measure the value of the dollar against a basket of six foreign currencies: the euro (57.6%), Japanese yen (13.6%), British pound (11.9%), Canadian dollar (9.1%), Swedish krona (4.2%) and Swiss franc (3.6%). Simply put, if DXY moves up then the U.S. dollar is gaining value compared to these other currencies.
This chart shows the Bitcoin price vs the DXY valuation. Absolute and log scales are available to compare the data series in a better manner.
Looking at the DXY versus Bitcoin chart shows a clear negative correlation. BTC had bear markets when DXY moves up and BTC had bull markets when DXY moved down. Moreover, when DXY is trending up, markets typically remain risk-off. Investors feel less urge to invest when their dollar savings are increasing in value against other currencies. Likewise when their dollar savings are decreasing in value then people feel the urge to invest their dollars in more risky assets.
DXY also has an inverse relationship with the commodities and oil price. Both are priced in dollar and ar negatively correlated to the US dollar.
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