The U.S. dollar is heading for a weekly loss as record bearish positioning fails to spark a rally in bitcoin, challenging the cryptocurrency’s long-standing inverse relationship with the greenback.
The U.S. Dollar Index traded near 96.9 in early U.S. hours on Friday, up 0.1% on the day but still on track for a 0.6% weekly decline, while positioning data compiled by Bank of America showed underweight exposure at its weakest level since records began in 2012.
Despite easing concerns over Federal Reserve independence following Kevin Warsh’s nomination as Fed chair, Bank of America analysts said the shift has not revived demand for U.S. assets, noting that investors are raising FX hedge ratios, trimming U.S. exposure and anticipating further reserve diversification away from the dollar.
Much of the bearish survey data predates a stronger-than-expected U.S. jobs report, which alongside resilient economic indicators and shifting rate expectations could offer near-term support to the currency.
Historically, bitcoin has moved inversely to the dollar as a weaker greenback loosens financial conditions and makes the digital asset cheaper for global buyers, but since early 2025 the 90-day correlation has climbed to 0.60, its highest level since April 2025, even as the dollar fell 9% last year and a further 1% this year while bitcoin dropped 6% in 2025 and 21% year-to-date.
If the positive correlation persists, a deeper dollar slide may not automatically lift bitcoin, while an overcrowded bearish dollar trade increases the risk of a short squeeze that could force traders to cover positions and potentially push both the dollar and bitcoin higher simultaneously.
The shifting dynamic underscores growing complexity in cross-asset relationships as macro positioning, rate expectations and liquidity conditions increasingly drive both currency and crypto markets in tandem rather than in opposition.
At the time of reporting, Bitcoin price was $67,474.79.