BTC Loses Steam Amid US Dollar Index Rebound

The correlation between Bitcoin (BTC) and the US Dollar Index (DXY) is often seen as a straightforward inverse relationship. However, a closer look at their weekly charts reveals that this relationship is not always clear-cut.

In early 2025, DXY broke out of its range, but BTC did not immediately follow suit. Instead, it topped out and then followed DXY downward into a sharp multi-month distribution. This lag in response was not seen until the market had already moved on.

In 2026, DXY carved out a structural floor zone and began to grind upward. However, BTC's recovery attempt stalled near $67k, leaving its price structure looking heavy. The current weakness in BTC is attributed to a compounding liquidity squeeze caused by real yield pressure and the loss of independent catalysts.

The US 10-year Treasury (TVC:TNX) has been pushing up yields, drawing capital away from risk assets like Bitcoin toward safer options with higher returns. Additionally, the absence of heavy ETF inflows and halving narratives that previously helped drive BTC prices upward has left it exposed to broader macro tightening.