Bitcoin’s price has been climbing lately, even making new highs, despite some market turmoil. This is surprising, given what usually happens.
The Usual Story: Bitcoin and Macroeconomics
Historically, Bitcoin’s price has been closely tied to a few key economic indicators:
- US Dollar Index (DXY): This measures the US dollar’s strength against other currencies.
- US Treasury Yields: These show the returns on US government bonds.
Typically, when both the DXY and Treasury yields rise, investors move away from riskier assets like Bitcoin, causing its price to fall. Conversely, when the DXY and yields weaken (often hinting at potential Federal Reserve interest rate cuts), investors are more likely to take on risk, boosting Bitcoin’s price.
Bitcoin’s Unexpected Behavior
However, something unusual is happening. Recently, Bitcoin’s price has been going up even as Treasury yields hit record highs! This is breaking the traditional pattern. This is especially true when the DXY is falling.
A New Role for Bitcoin?
This suggests Bitcoin might be evolving. It’s possible that investors are increasingly viewing Bitcoin as a safe haven asset, a store of value, similar to gold. This would explain why its price isn’t dropping as much as expected when other market indicators point downward. Basically, Bitcoin might be less sensitive to the usual economic forces that affect it.
At the time of writing, Bitcoin is trading just below $106,000, up about 2% in the last 24 hours.
