### The DXY is an index that measures the strength of the US dollar against a basket of other currencies. The common belief is that when this index goes up, BTC tends to go down and vice versa. Many traders believe this to be as true as gravity. 

The price movement of BTC is something that people spend their entire working day trying to predict, and not many people get close to being right enough to actually consistently earn money. There’s whale ‘manipulation’, regulation, outright bans, and so many unpredictable factors that push the price around like a hot air balloon in a storm. 

In periods of uncertainty (isn’t this all the time?), traders and investors like to find ways to understand what’s behind the price movement. One thing we notice from the twitterverse and youtubeverse is that the inverse correlation of BTC and the DXY is accepted like gospel truth, without much explanation. 

The DXY, which you can check [here](https://www.marketwatch.com/investing/index/dxy) finds itself mentioned quite regularly when BTC makes big moves. So when BTC goes up, does the DXY dependably move in the opposite direction? 

In this [article](https://cointelegraph.com/news/data-challenges-the-dxy-correlation-to-bitcoin-ralliesand-corrections-thesis) by cointelegraph, the assumption of DXY - BTC inverse correlation is called into question: “The periods of inverse movements between Bitcoin and the DXY index have never exceeded 36 days.” It was pointed out that there are many historical events that pushed the BTC price down even when the DXY was also going down (not inverse). 

We do not completely dismiss the usefulness of the DXY, even in the face of the data and arguments presented by cointelegraph. We see the DXY not as something predictive of short term movements but as something that is useful to understand one source of upward or downward pressure on the BTC price. 

The DXY sheds some insight on whether there is upward or downward pressure on BTC that is coming from the relative strength of the US dollar. Ultimately, the DXY is by no means a crystal ball; but, sometimes it’s hard to shake the habit of checking it. For instance, if the BTC price has lost volatility the movement of the DXY can give some clues as to which direction BTC may move next.

The DXY is an index that measures the strength of the US dollar against a basket of other currencies. The common belief is that when this index goes up, BTC tends to go down and vice versa. Many traders believe this to be as true as gravity. 

Thu Nov 03 2022

Do You Check the DXY?

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Thu Nov 03 2022 Do You Check the DXY?

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Prototype Global Cryptoasset Mapping System Developed

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Do You Check the DXY?