BofA survey shows record bearish dollar positioning

A Bank of America FX and rates sentiment survey suggests investors have turned decisively bearish on the U.S. dollar. In the bank’s latest read, positioning in the greenback fell to the most underweight level in the data series that starts in January 2012. The survey was conducted Feb. 6–11 among 42 fund managers overseeing about $702 billion.

The logic behind the trade is straightforward. Respondents leaned toward a softer U.S. outlook and a higher chance of Fed easing. Several pointed to labor market risk as the main catalyst that could push the dollar lower, since weaker hiring typically brings rate cuts back into the conversation. Bank of America also noted that most investors either prefer to raise FX hedge ratios or reduce exposure to U.S. assets.

There is another detail worth flagging. The bank said some of the responses arrived before the latest strong U.S. jobs report, which means the positioning could look less lopsided if the data keeps surprising to the upside.

So where does Bitcoin fit into this?

For most of its life, Bitcoin has tended to move opposite the U.S. Dollar Index (DXY). When the dollar weakens, dollar-priced assets can look more attractive, and global financial conditions often loosen. When the dollar strengthens, the opposite tends to happen, and risk assets usually feel it first.

If that historical relationship were the only thing that mattered, record bearish dollar positioning would look like a supportive macro backdrop for BTC.

But the last year has complicated the story. Since early 2025, Bitcoin has at times moved in the same direction as the dollar, not against it. DXY fell more than 9% in 2025 and slid again early this year, while BTC also posted a negative year in 2025 and remained down sharply year-to-date. Data cited from TradingView showed the 90-day correlation between BTC and DXY rising to 0.60, its highest reading since April 2025.

That shift matters because it changes how traders read the next dollar move.

If the positive correlation holds, further DXY weakness may not translate into a Bitcoin bounce. Instead, it could coincide with more pressure on BTC, especially if the weaker dollar is tied to broader risk-off positioning, growth fears, or forced de-risking.

At the same time, extreme positioning can become its own catalyst. When too many investors crowd into the same bet, the market gets jumpy. A surprise data print, a hawkish Fed message, or any shift in rate expectations can spark a fast reversal. In FX, that often shows up as a short squeeze, where traders who bet against the dollar rush to buy it back.

InvestingLive’s Eamonn Sheridan summed it up in a recent market note: record short positioning raises the risk of volatility in major USD pairs. Downside can extend on weak U.S. data, but crowded positioning also increases the odds of sharp short-covering rallies.

For Bitcoin, a squeeze-driven dollar bounce could be a twist. If BTC is still trading with DXY, the dollar rally might pull BTC higher too. If the older inverse relationship reasserts itself, the same dollar bounce could weigh on BTC. Either way, the setup points to volatility rather than a clean, one-way signal.