Bitcoin Deep Dive #64
Everything Is Risk-On Except Bitcoin
Goldilocks Replaces Deflation
Two weeks ago the market had a problem with itself. The market regime, what investors were actually pricing, was reflation, a risk-on bet that growth stays strong. But our macro regime, what we expected over the next six months, was deflation, a slowdown. The market was leaning one way while our forward call leaned the other. That tension is gone now. Our six-month call has shifted from deflation to goldilocks, the setup where growth stays solid while inflation cools. The market is still pricing reflation, and what comes next is now risk-on too. The one catch is that the inflation data is not fully clean yet, so this is an improvement, not an all-clear.
What This Means For Bitcoin: Bitcoin fell back to its February low near $60K over the past two weeks even as the backdrop turned risk-on, and we see $60K as strong support where buyers are stepping in.
The Fed Still Has An Inflation Problem
Zoom out and the big picture is encouraging but not simple. Growth, government spending, and liquidity are all working in Bitcoin’s favor, while inflation and the Fed are the sticking points. The economy keeps shrugging off shocks that were supposed to break it, thanks to strong company and household balance sheets, the AI spending boom, and pro-growth policy. But the Fed is stuck. It can fairly look through a temporary oil spike. It cannot look through heavy government deficits, money printing, and credit growth if those keep inflation hot. China does not rescue the story either, since it keeps pumping in liquidity without getting much growth in return.
What This Means For Bitcoin: Firm growth and rising liquidity are good for Bitcoin over time, but the Fed still has to get inflation under control first.
The Tape Is Risk-On, But Bitcoin Still Lags
Almost everything is flashing risk-on right now. The market regime is still reflation and our macro regime has improved to goldilocks, so both horizons agree. Stocks, oil, and commodities all carry bullish momentum, volatility is falling across the board in a way that supports risk-taking, and the models see a friendly setup for the next few months. Bitcoin and Ethereum are the glaring exceptions, still stuck in bearish momentum while the rest of the market climbs. We think this is rotation, not fear. Investors are pulling money out of crypto to chase the hottest trades on the board, the AI buildout, data centers, and a wave of new IPOs, and Bitcoin is getting left behind in the rush. The irony is hard to miss. The same flood of liquidity funding all those trades is exactly what tends to lift Bitcoin later.
What This Means For Bitcoin: Bitcoin is being ignored while money chases AI and new listings, but as liquidity keeps building, that neglect is unlikely to last.
The following section is exclusive to Premium subscribers and includes our Dynamic DCA recommendation based on Bitcoin’s on-chain metrics.
