Over the past few weeks, the price of Bitcoin has maintained a relatively strong momentum, recording slight highs and lows in its upward recovery. Interestingly, this upward movement at the beginning of the week was corrected following the escalation of the conflict between Israel and Iran.
In general, the overall positive outlook for the leading cryptocurrency has remained, although it has been observed to contradict the historical perspective. An analyst on the social media platform X delved into this strange phenomenon in the Bitcoin market and the potential reasons behind it.
■▪︎ Historical correlations of Bitcoin with macroeconomic tools
In a recent post on platform X, an analyst on platform X, known by the alias Darkfost, analyzed what was known until recently as the traditional expectations in the Bitcoin market compared to the broader macroeconomy. The cryptocurrency expert mentioned that investors consider key indicators when trying to decode institutional sentiment and the broader state of global liquidity.
The key indicators highlighted by investors in this analysis include the U.S. Dollar Index (DXY), which measures the value of the U.S. dollar against a basket of major foreign currencies, and U.S. Treasury yields, which primarily represent the returns investors earn on U.S. government bonds.
According to Darkfost, the chart above illustrates a well-known macroeconomic principle: when both the U.S. Dollar Index (DXY) and bond yields rise, capital tends to flee from risky assets (including Bitcoin). As a result, the leading cryptocurrency becomes susceptible to corrective movements.
According to a blockchain analyst, this principle is supported by historical trends, as bearish cryptocurrency markets have coincided with strong bullish trends in both yields and the U.S. Dollar Index (DXY).
On the other hand, when the U.S. Dollar Index (DXY) and yields lose momentum, investor risk appetite tends to increase. Darkfost explained that this could be due to expectations of interest rate cuts from the Federal Reserve, which fuels bullish sentiment in cryptocurrency markets.
■▪︎ Bitcoin breaks traditional macroeconomic logic
In his post on X, Darkfost noted that the current Bitcoin cycle has been unusual. The electronic analyst reported a decoupling between the price of Bitcoin and bond yields, which seems to negate usual macroeconomic principles.
The analyst noted that the price of Bitcoin continues to rise, despite yields reaching some of their highest levels in history. However, he emphasized that this situation will persist as the U.S. Dollar Index (DXY) declines.
