FameEX Hot Topics | Bitcoin Thrives on Wobbly Dollar, Not as Inflation Hedge: NYDIG

Greg Cipolaro, NYDIG’s global head of research, declared on October 24, 2025, that Bitcoin does not consistently function as an inflation hedge, challenging a long-held narrative in the crypto community. Instead, he describes Bitcoin as a “liquidity barometer,” increasingly responsive to broader market dynamics. In a detailed note, Cipolaro explained that Bitcoin’s price shows no strong or consistent correlation with inflation metrics, such as the Consumer Price Index. This finding undermines the popular view of Bitcoin as “digital gold” designed to protect against rising prices. As Bitcoin becomes more integrated into the traditional financial system, its behavior aligns more closely with macroeconomic indicators than with inflation alone, marking a significant evolution in its role.

Cipolaro highlighted that a weakening U.S. dollar, tracked via the U.S. Dollar Index, is a key driver of Bitcoin’s price surges, much like gold. Unlike inflation, which lacks a reliable impact, a declining dollar creates favorable conditions for both assets. Bitcoin exhibits an inverse correlation with the dollar, though this relationship is newer and less consistent than gold’s. As Bitcoin embeds itself further into traditional financial markets, NYDIG anticipates this correlation will strengthen, positioning Bitcoin as a sensitive gauge of currency fluctuations. This shift suggests investors may increasingly view Bitcoin as a hedge against dollar depreciation rather than a direct shield against inflation.

Contrary to conventional wisdom, Cipolaro noted that gold, often marketed as a premier inflation hedge, also fails to deliver consistent protection against rising prices. Data shows gold has an inverse correlation with inflation and performs inconsistently across different economic periods. Like Bitcoin, gold thrives when the U.S. dollar weakens, reinforcing its role as a currency hedge rather than an inflation safeguard. This shared behavior underscores a broader trend: both assets respond more to monetary policy shifts and currency dynamics than to inflationary pressures, challenging long-standing assumptions about their utility.

Cipolaro identified interest rates and global money supply as the dominant macroeconomic factors influencing Bitcoin and gold. Falling interest rates typically boost both assets, while rising rates exert downward pressure. This dynamic, well-established for gold, has become increasingly pronounced for Bitcoin over time. Additionally, looser monetary policies globally have consistently supported Bitcoin’s price growth, with a strong positive correlation. These factors highlight Bitcoin’s sensitivity to liquidity conditions, positioning it as a barometer of global financial flows rather than a standalone inflation hedge.

Bitcoin’s price movements, increasingly mirroring gold’s in response to macroeconomic conditions, signal its growing integration into the global financial ecosystem. Cipolaro emphasized that while gold serves as a hedge against real interest rates, Bitcoin has evolved into a measure of market liquidity. This shift reflects Bitcoin’s maturing role within traditional finance, where its sensitivity to monetary policy and dollar strength is becoming more pronounced. As Bitcoin continues to intertwine with global markets, its utility as a liquidity indicator is likely to solidify, reshaping investor strategies and expectations for the asset’s future.

Disclaimer: The information provided in this section is for reference only and does not represent any investment advice or the official views of FameEX.