Bitcoin Deep Dive #65
Bitcoin Is Waiting For The Fed
Risk-On Holds But Oil Breaks
The top-down market regime remains REFLATION and the six-month macro backdrop is expected to be GOLDILOCKS. U.S. and global stocks maintain bullish momentum, volatility across equities, bonds, and currencies is bearish, and the U.S. dollar is still neutral. Asset markets are pricing in risk-on and the cycle is intact. The marginal change worth flagging is oil, which has slipped from bullish to neutral. That matters more than it looks. Oil cannot hold its bid despite multiple active wars. When crude rolls over against that backdrop, it tells you the inflation impulse is finally fading. The question is no longer whether the current economic cycle holds. The new question is what the Fed does next.
What This Means For Bitcoin: The Fed’s hawkish posture is suppressing Bitcoin, which should break free once easing finally begins.
The Hawkish Fed’s Expiration Date
What matters now for Bitcoin is how long the Fed keeps pretending it wants to tighten, and our answer is six to nine months at most. New Fed Chair Kevin Warsh is trading detailed guidance for fewer, shorter messages, which seems hawkish today because there’s less dovish hand-holding guiding investors. The substance underneath points the other way. A shrinking Fed balance sheet requires the market to absorb the Treasuries the Fed stops holding, and commercial banks are being deregulated so they can warehouse that supply. This is a stealth easing of financial conditions. Additionally, the headline jobs numbers keep getting revised lower after the fact, so the labor market is softer than the official data shows. Meanwhile, inflation near 2.3% against 3.3% core PCE signals that there is less inflation than the Fed admits.
What This Means For Bitcoin: The Fed’s hawkishness is a mask, but the machinery underneath is dovish. An explicit dovish pivot would be a green light for Bitcoin.
Bitcoin Is Stuck In A Bearish Range
Asset markets continue to be risk-on. Equities are bullish, volatility is bearish across asset classes, the U.S. dollar is neutral, and oil cooling removes the last live inflation worry. Our three-month forward signals are bullish on stocks, gold, Bitcoin, and commodities. The one thing fighting the trade is rates. Two-year and ten-year yields are bullish and pushing higher because the Fed is still posturing hawkish, and that rising-rate pressure is exactly what is keeping Bitcoin pinned. Bitcoin is the lone holdout in an otherwise green tape, bearish and trapped between roughly $58.8K and $66K. Lose $58.8K and the next downside test is the on-chain realized price near $53.4K. Reclaim $66K and Bitcoin finally confirms that this backdrop is pulling crypto back in.
What This Means For Bitcoin: Until Bitcoin reclaims $66K, rates and the Fed are the only things keeping it pinned.
The following section is exclusive to Premium subscribers and includes our Dynamic DCA recommendation based on Bitcoin’s on-chain metrics.
