According to the latest survey from Bank of America (BofA), investor sentiment towards the dollar is at its most pessimistic level in over ten years. This extreme outlook could lead to increased volatility for bitcoin $BTC$68,266.99, but not necessarily in the way that cryptocurrency enthusiasts have come to expect.
The February survey by BofA indicates that investor sentiment regarding the U.S. dollar has reached its lowest point since early 2012, with net exposure reflecting a significant underweight position. This shift is largely attributed to worries about a potential decline in the U.S. labor market, which may lead the Federal Reserve to lower interest rates.
Historically, bitcoin has tended to move inversely to the U.S. Dollar Index; it tends to rise when the dollar weakens and fall when it strengthens. There are two primary reasons for this trend: first, as an asset priced in dollars, a weaker dollar makes $BTC more affordable; second, a strong dollar can tighten global financial conditions and negatively impact risk assets like bitcoin—while conversely benefiting them during periods of dollar weakness.
If we look back at historical trends, this unprecedented bearish positioning on the dollar suggests that investors are anticipating further declines in its value—a scenario that could serve as a classic bullish indicator for bitcoin.
However, there’s an unexpected development: since early 2025—and particularly recently—bitcoin has shown an unusual positive correlation with the dollar. The DXY index fell over 9% last year and another 1% this year; yet during this time frame,
$BTC experienced a drop of 6% in 2025 and is down by 21% so far this year.
According to TradingView data sources, their correlation over ninety days reached .60 on Monday—the highest level recorded since April 2025.
If this relationship persists, further declines in the Dollar Index might not bode well for bitcoin’s performance.
On another note,a rebound ofthedollar driven by short covering could potentially lift $BTC alongside it.
When investors engage heavily in bearish positions and prices unexpectedly bounce back upward,they often rush back into buying positions en masseto mitigate losses,resultingina short squeeze.This frantic activity can drive asset prices higher while significantly increasing volatility levels.
Eamonn Sheridan,the Chief Asia-Pacific Currency Analyst at InvestingLive notedin amarket update,”Record short positioning raises concerns about volatility across major USD pairs; while downside risks may persist due tounfavorable US economic data,crowded trading dynamics heighten prospectsfor sharp rallies triggeredbyshort-covering.”
As of now,theDollarIndex wasup0 .25 %todayat97 .13 ,andBitcoinwastradingat$68 ,150 ,down1 %,accordingtoCoinDeskdata .