PrimeXBT Insights: Bitcoin and the Dollar: Is a Familiar Cycle Repeating?

Analysing the inverse relationship between DXY and BTC, with a focus on bottoming duration and momentum shifts.

By Jonatan Randin, Market Analyst at PrimeXBT

Rates, Inflation and Growth – Setting the Scene

The current environment is one of elevated interest rates, with markets beginning to price in future cuts. At the same time, the economy has remained resilient and concerns about inflation have not fully gone away. This mix of strong growth, sticky inflation, and shifting policy expectations sets the backdrop, but does it also create a scenario where the dollar is building a longer accumulation phase?

For traders navigating these macro shifts, PrimeXBT, a global multi-asset broker, provides access to Bitcoin and other key markets, offering a vantage point to track how these dynamics shape price cycles.

DXY and Bitcoin – A Historical Inverse Pattern

When the US dollar index (DXY) has reached major bottoms, Bitcoin has often marked significant tops. An overlay of the two shows this repeated relationship across cycles. Historically, these bottoms have not formed overnight: previous accumulation cycles in 2011, 2014, 2018, and 2021 took between 120 and 300 days, averaging close to 190 days. The current structure has been developing for only around 50–80 days, which may indicate we are still early in the process of a potential bottom.

Bitcoin’s RSI Divergence – A Cautionary Signal

Bitcoin’s momentum shows signs of strain. The Relative Strength Index (RSI) has been making lower highs while price has moved higher, a pattern known as bearish divergence. A similar setup appeared in 2021 at the top of that bull market.

While the current price action looks almost identical to the 2021 top, sentiment is notably different. Major cycle peaks have typically formed on high volume and widespread euphoria, which are not evident at present. The divergence may still play out as a correction, yet whether it marks a lasting top is less certain when viewed alongside the broader metrics and patterns discussed in this article.

Bitcoin’s Long-Term Cycle

From a broader perspective, Bitcoin still appears to be in the expansionary phase that typically follows a halving. Historical cycles show that peaks have usually formed several hundred days after each halving, with an average of around 500 days. Each cycle, however, has shown variations in both duration and intensity, which makes the exact timing uncertain.

Regression models suggest that Bitcoin remains within its long-term growth channel, and indicators such as the MVRV Z-Score point to cycle maturation without yet reaching the extremes seen at previous peaks. This aligns with the idea that while the market has already advanced strongly, there may still be further upside before a conclusive top is established.

When viewed alongside the dollar, the timing becomes especially relevant. Previous USD bottoms have often taken between 120 and 300 days to form, averaging close to 190 days. With the current structure only developing for around 50–80 days so far, the bottoming process could extend well into the next 100 days or more. If that scenario plays out, it may overlap with Bitcoin’s own long-term cycle window, creating conditions where a final leg higher could unfold before a broader top is confirmed.

Trading Bitcoin with PrimeXBT

PrimeXBT, a regulated multi-asset broker, provides a professional-grade environment for trading Bitcoin and other digital assets, combining deep liquidity, competitive fees, and advanced risk management features.

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For traders watching Bitcoin’s interplay with macro forces like the dollar cycle, having reliable execution and transparent conditions is key. PrimeXBT’s regulated status, multi-asset offering, and client-first approach provide a trusted foundation to navigate the evolving market dynamics without compromising security or flexibility.

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