The US dollar index is used to measure USD against six foreign currencies with different weights: euro, Swiss franc, Japanese yen, Canadian dollar, British pound, and Swedish krona. It gives a general idea of USD's valuation in the global market.
So, what does it have to do with Bitcoin?
There seems to be a pattern where Bitcoin reaches its cycle top when USD is in its local bottom. And when Bitcoin has reached its bottom, USD isn't exactly in its local top, but in the middle of an uptrend.
Technically Bitcoin reached its top in November 2021, but there's an argument to be made that the top actually was already in April – this is inline with a lot of onchain metrics.
The dollar index has been on an uptrend since April 2021, and if the pattern repeats Bitcoin will bottom around halfway before the dollar peaks. This obviously is no tool to predict the bottom, but I think the connection with Bitcoin and the dollar index is interesting.
What do you think?
