Bitcoin Gains Linked to Dollar Weakness, Not Inflation: NYDIG Study
NYDIG's research indicates that Bitcoin's price is more influenced by the US dollar's strength and liquidity conditions than by inflation.
Key Insights
- Weak links exist between inflation measures and Bitcoin's price, challenging its role as an inflation hedge.
- Both Bitcoin and gold gain value when the US dollar weakens, though Bitcoin's correlation is less steady.
- Interest rates and money supply are major factors influencing both assets. Lower rates and increased liquidity typically boost their prices.
- Bitcoin acts as a market liquidity gauge, while gold serves as a real-rate hedge.
Market Dynamics
- On-chain data shows renewed selling pressure with 62,000 BTC returning to circulation.
- The decrease in illiquid Bitcoin could lead to price pressure, similar to past events.
- Consistent selloff from wallets holding 0.1 to 100 BTC and reduced demand from new buyers may weaken rallies.