Bitcoin’s Inverse Ties With Dollar Index Challenged as U.S. Election Looms

Bitcoin and the US dollar index have historically had an inverse correlation, but that may change as the US election approaches. Options trading indicates a bullish bias for both Bitcoin (BTC) and the USD in the near term. There is an increased demand for BTC upside exposure due to growing odds of a potential Trump victory. However, if options pricing is any indication, this inverse relationship between BTC and the dollar index may break down during the US election. BTC risk reversals show a bullish bias, while options for the euro-dollar (EUR/USD) and GBP/USD suggest concerns about continued dollar strength. Despite this, Bitcoin has already started to ignore the dollar index, with its price rising to nearly $68,000 despite the index holding steady. Traders are optimistic about BTC’s future, particularly in the event of a Trump win, with some predicting BTCUSD reaching $70,000 in the coming weeks. The popularity of call options at $80,000 and the $100,000 call having over $1 billion in notional open interest further signals a desire for upside exposure. The US election has been a dominant narrative for the crypto market, with Trump’s support for the space being seen as positive. In contrast, the potential crypto policy under a Kamala Harris administration remains unclear.