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Bitcoin (BTC) Bull Case Strengthens as Fed Holds Rates, Dollar Weakens, and Nvidia (NVDA) Correlation Hits 0.80 | Flash News Detail | Blockchain.News
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6/28/2025 4:36:00 PM

Bitcoin (BTC) Bull Case Strengthens as Fed Holds Rates, Dollar Weakens, and Nvidia (NVDA) Correlation Hits 0.80

Bitcoin (BTC) Bull Case Strengthens as Fed Holds Rates, Dollar Weakens, and Nvidia (NVDA) Correlation Hits 0.80

According to the source, the U.S. Federal Reserve's decision to hold interest rates steady while signaling weaker future growth and stickier inflation is creating a bullish environment for Bitcoin (BTC). The report highlights several key factors for traders: the U.S. Dollar Index (DXY) has fallen to its lowest level since March 2022, a development described as 'very bullish' for Bitcoin by Andre Dragosch of Bitwise. Furthermore, the analysis points to a strong positive correlation between Bitcoin and AI-related stocks, with the 90-day correlation coefficient between BTC and Nvidia (NVDA) at 0.80 as NVDA shares hit a new record high. The source also notes that traditional recession indicators, such as a steepening yield curve and declining consumer confidence, are prompting traders to price in future Fed rate cuts, which historically benefits risk assets like Bitcoin.

Source

Analysis

Bitcoin Price Surges as Fed Holds Rates Amid Growing Recession Fears and Tech Rally



Bitcoin (BTC) is demonstrating significant strength, climbing towards the $108,000 mark as a confluence of macroeconomic factors creates a bullish environment for risk assets. The primary catalyst was the U.S. Federal Reserve's decision to hold its benchmark interest rate steady, a move that was widely anticipated by markets. However, the accompanying economic projections revealed a more dovish tilt than expected, with policymakers lowering their GDP growth forecast for the year to 1.4% and projecting higher inflation. While the initial reaction saw Bitcoin's price remain relatively stable around $104,200, the underlying details of the Fed's statement, combined with other market dynamics, have since fueled a significant rally. As of the latest data, the BTCUSDT pair is trading at approximately $107,711, representing a notable increase and showcasing renewed investor confidence. The broader market is also showing strength, with ETHUSDT trading at $2,443 and SOLUSDT pushing past $150.



A key driver of this upward momentum is the pronounced weakness in the U.S. dollar. The Dollar Index (DXY), which measures the greenback against a basket of major currencies, recently dropped to its lowest level since early 2022. This decline eases global financial conditions and typically spurs investment in assets like Bitcoin, which are priced in dollars. Andre Dragosch, head of research at Bitwise, noted that the DXY's fall has "very bullish implications for global money supply growth and bitcoin." This sentiment is reinforced by movements in the derivatives market. According to data from the CME FedWatch tool and analysis by Bloomberg, interest rate swaps are now pricing in a higher probability of rate cuts later this year, with traders anticipating a combined 60 basis points of easing over the remaining four meetings of the year. This shift towards a more accommodative monetary policy is a powerful tailwind for non-yielding assets like BTC.



The Nvidia-Bitcoin Correlation and AI Sector Strength



Adding another layer of bullish sentiment is the remarkable performance of the stock market, particularly the technology sector. Shares in AI-chip giant Nvidia (NVDA) surged to a new record high, closing up over 4% on Wednesday. The correlation between NVDA and BTC has become increasingly significant for traders, with the 90-day correlation coefficient currently standing at a strong 0.80. This indicates that the two assets have been moving in tandem, with the rally in AI-related stocks spilling over into the digital asset space. Both assets bottomed out in late 2022 and have been on a powerful uptrend since. The recent bullish "golden cross" formation on Nasdaq futures further signals a continued risk-on appetite among investors, providing a favorable backdrop for both high-growth tech stocks and cryptocurrencies.



Bond Market Flashes Recession Warnings



While the equity market rallies, the bond market is sending more cautious signals that paradoxically strengthen the long-term case for Bitcoin. The yield on the 2-year U.S. Treasury note has fallen significantly, causing a steepening of the yield curve when compared to the 10-year yield. As noted by wealth advisor Kurt S. Altrichter, this "bull-steepening" has historically preceded economic recessions. This is compounded by deteriorating consumer sentiment; the Conference Board's expectations index recently fell to 69, well below the 80 threshold that often signals an impending recession. For crypto traders, these recessionary cues are critical. An economic downturn would likely force the Federal Reserve to cut interest rates more aggressively, further devaluing the dollar and increasing the appeal of Bitcoin as a store of value and a hedge against inflationary monetary policy. This complex interplay between a hawkish Fed stance, a weakening dollar, a tech-led market rally, and recessionary bond market signals is creating a unique and potent setup for continued Bitcoin price appreciation.

The Kobeissi Letter

@KobeissiLetter

An industry leading commentary on the global capital markets.

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