Dollar pessimism hits multi-year extreme in Bank of America survey — implications for bitcoin

Bearish bets on the U.S. dollar have reached their most extreme level in more than 10 years, according to Bank of America’s February fund manager survey — a positioning shift that could stir volatility in bitcoin, albeit in an unexpected way.

The survey shows investors are now holding their largest net underweight position in the dollar since at least early 2012. Fund managers cited concerns about further softening in the U.S. labor market, which could push the Federal Reserve toward cutting interest rates.

Traditionally, bitcoin has moved inversely to the U.S. Dollar Index (DXY). As a dollar-denominated asset, BTC tends to benefit when the greenback weakens, making it cheaper for overseas buyers. A stronger dollar, meanwhile, tightens global liquidity and often pressures risk assets, including cryptocurrencies. By that historical logic, record bearish positioning in the dollar would normally be viewed as a tailwind for bitcoin.

But recent market dynamics complicate the picture.

Since early 2025, bitcoin has displayed a positive correlation with the dollar. The DXY dropped more than 9% last year and has slipped again this year, yet bitcoin has also declined — falling 6% in 2025 and roughly 21% year-to-date. According to data from TradingView, the 90-day correlation between BTC and the dollar index recently rose to 0.60, the strongest reading since April 2025.

If this positive correlation continues, additional dollar weakness could coincide with further downside in bitcoin, breaking from the long-standing inverse relationship. Conversely, a sharp rebound in the greenback could lift BTC alongside it.

Such a rebound could be driven by a short squeeze. With positioning heavily skewed toward dollar weakness, even modestly stronger U.S. economic data could force traders to unwind short positions quickly. That scramble to cover could propel the dollar higher and increase volatility across markets.

“Record short positioning raises the risk of volatility in major USD pairs; downside may extend on weak U.S. data, but crowded trade dynamics increase potential for sharp short-covering rallies,” said Eamonn Sheridan, chief Asia-Pacific currency analyst at InvestingLive.

At the time of writing, the dollar index was up 0.25% at 97.13, while bitcoin was trading around $68,150, down roughly 1% on the day, according to CoinDesk data.