BofA Survey Flags Dollar Bearish Bets at over a Decade High. Here's What It Means for Bitcoin
•February 17, 2026
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Why It Matters
The extreme bearish dollar positioning could amplify crypto volatility and influence Bitcoin’s price direction, impacting risk‑on investors and broader market sentiment.
Key Takeaways
- •Dollar bearish positioning hits decade‑high
- •Bitcoin historically inversely correlated with dollar
- •90‑day BTC/DXY correlation rose to 0.60
- •Dollar short squeeze could trigger BTC volatility
- •Fed rate cuts may weaken dollar further
Pulse Analysis
The latest Bank of America positioning survey reveals that investors have taken the most aggressive short stance on the U.S. dollar since at least 2012, pushing net exposure into record underweight territory. The shift is driven by lingering concerns over a weakening labor market and the prospect of Federal Reserve rate cuts, which would further erode the dollar’s appeal. A softer greenback reduces the cost of dollar‑denominated assets and eases global financial conditions, setting the stage for heightened risk‑taking across equities, commodities and digital currencies.
Bitcoin has traditionally moved opposite to the Dollar Index, benefitting from a depreciating dollar that makes the cryptocurrency cheaper for overseas buyers and loosens monetary pressure on risk assets. However, data from early 2025 onward shows a striking departure: the 90‑day correlation between BTC and the DXY climbed to 0.60, the highest since April 2025. This positive linkage suggests that Bitcoin may now be more sensitive to dollar dynamics, potentially mirroring dollar rebounds rather than the classic inverse relationship that many traders have relied upon.
Market participants should therefore monitor two divergent scenarios. If the dollar continues to slide, the historic bullish tailwind for Bitcoin could be muted or even reversed, adding volatility to an already jittery crypto market. Conversely, a rapid short‑covering rally in the greenback—common when heavily bearish positions are forced to unwind—could lift Bitcoin alongside the dollar, creating a sharp upside move. Investors weighing exposure to crypto should factor in the crowded dollar short trade, Fed policy outlook, and the evolving BTC‑dollar correlation when shaping their risk‑adjusted strategies.
BofA survey flags dollar bearish bets at over a decade high. Here's what it means for bitcoin
BofA's February survey shows investor positioning in the U.S. dollar has fallen to its most negative level since at least early 2012.
By Omkar Godbole
Feb 17 2026, 5:43 a.m.
What to know:
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Investors are more bearish on the U.S. dollar than ever, a positioning that has historically been a bullish tailwind for bitcoin because a weaker dollar tends to support risk assets.
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Since early 2025, bitcoin has developed an unusually positive correlation with the dollar, with their 90‑day correlation reaching 0.60 even as both the dollar index and BTC have fallen.
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If this new link holds, a further dollar slide could hurt bitcoin, while a sharp dollar short‑squeeze and rebound could instead lift BTC.
Investors are most bearish on the dollar in over a decade, per Bank of America’s (BofA) latest survey, and that extreme bet could breed bitcoin volatility, just not the way crypto bulls have become used to.
BofA’s February survey shows investor positioning in the U.S. dollar has fallen to its most negative (bearish) level since at least early 2012, with net exposure at a record underweight. This is driven by concerns over further deterioration in the U.S. labor market, which could prompt the Federal Reserve to cut interest rates.
Since its inception, bitcoin has mostly moved in the opposite direction of the U.S. Dollar Index, rising when the greenback slides and falling when it strengthens. That tracks for two big reasons: as a dollar‑denominated asset, a softer buck makes BTC cheaper to buy and vice versa. Plus, a strong dollar tightens financial conditions globally, hammering risk assets like bitcoin, and the reverse holds when it weakens.
So, if history is a guide, the record bearish dollar positioning—a sign of investors aligned for a weaker dollar—could be termed a classic bullish tailwind for bitcoin.
But there’s a twist. Since early 2025, and especially lately, bitcoin has developed a weird positive link to the dollar. The DXY plunged over 9 % last year and another 1 % this year. Yet BTC dropped 6 % in 2025 and is down 21 % year‑to‑date. Their 90‑day correlation hit 0.60 on Monday, the highest since April 2025, according to data from TradingView.
If that link sticks, a deeper slide in the dollar index may not bode well for bitcoin. Conversely, a dollar bounce fueled by a short‑squeeze could drag BTC higher with it.
When investors pile into extreme bearish positions, any unexpected price bounce forces them to buy back en masse to limit losses, creating a short squeeze. This frantic covering propels the asset price higher, amplifying volatility skyward.
“Record short positioning raises the risk of volatility in major USD pairs; downside may extend on weak US data, but crowded trade dynamics increase potential for sharp short‑covering rallies,”
— Eamonn Sheridan, Chief Asia‑Pacific Currency Analyst, InvestingLive
At press time, the dollar index was up 0.25 % on the day at 97.13 and bitcoin changed hands at $68,150, down 1 %, according to CoinDesk data.
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