Bearish dollar bets disrupt Bitcoin’s market dynamics

Bank of America reports record bearish sentiment on the US dollar. Bitcoin’s usual inverse correlation with the dollar has shifted, with both now moving together, increasing volatility risks for crypto markets.

Recent Bank of America surveys indicate that investor sentiment toward the US dollar is at its most bearish in over a decade, with record short positions and historically low net exposure. This skepticism is fueled by concerns about a weakening US labor market and uncertainty surrounding US monetary policy, despite ongoing efforts to restore confidence. Traditionally, a weaker dollar has been bullish for risk assets like Bitcoin, making them more attractive and loosening global financial conditions. However, since early 2025, Bitcoin has displayed an unusual positive correlation with the dollar. Both assets have declined together, and their 90-day correlation has reached a multi-year high. This shift suggests the traditional inverse relationship between Bitcoin and the dollar may be changing, introducing new volatility risks for cryptocurrency markets. Additionally, market participants remain cautious about potential increases in US debt and question the Federal Reserve's independence, further amplifying uncertainty.