FameEX Hot Topics | NYDIG Claims Bitcoin Shines When Dollar Wavers, Not Against Inflation

Greg Cipolaro, NYDIG’s global head of research, stated on October 24, 2025, that Bitcoin does not reliably serve as an inflation hedge, contrary to popular belief. Instead, it has evolved into a “liquidity barometer,” reflecting broader market dynamics. In a note, Cipolaro emphasized that Bitcoin’s price movements lack a strong, consistent correlation with inflation metrics, challenging the narrative that it acts as a safeguard against rising prices. This shift highlights Bitcoin’s growing integration into the traditional financial ecosystem, where its behavior aligns more closely with macroeconomic trends than with inflation alone.

Cipolaro noted that a weakening U.S. dollar, as measured by the U.S. Dollar Index, significantly boosts both Bitcoin and gold prices. Unlike inflation, which shows no consistent impact, a declining dollar creates favorable conditions for these assets. Bitcoin exhibits an inverse correlation with the dollar, though this relationship is less established than gold’s. As Bitcoin becomes more embedded in traditional finance, NYDIG expects this inverse correlation to strengthen, positioning Bitcoin as a sensitive indicator of currency fluctuations rather than a direct inflation shield.

Surprisingly, Cipolaro pointed out that gold, often touted as a classic inflation hedge, also fails to consistently protect against rising prices. Gold has shown an inverse correlation with inflation and inconsistent performance across different periods. Like Bitcoin, gold’s price tends to rise when the U.S. dollar weakens, underscoring its role as a hedge against currency depreciation rather than inflation. This parallel behavior between Bitcoin and gold highlights their shared sensitivity to broader monetary conditions over inflationary pressures.

Cipolaro identified interest rates and money supply as the primary macroeconomic factors influencing Bitcoin and gold. Falling interest rates typically boost both assets, while rising rates tend to suppress their prices. This relationship, initially stronger for gold, has become increasingly evident for Bitcoin over time. Additionally, looser global monetary policies have consistently supported Bitcoin’s price growth, reinforcing its sensitivity to liquidity conditions in the global financial system.

Bitcoin’s price movements, mirroring gold’s in response to macroeconomic factors, signal its deeper integration into the global financial landscape. Cipolaro summarized that while gold serves as a hedge against real interest rates, Bitcoin has emerged as a barometer of market liquidity. As Bitcoin continues to intertwine with traditional markets, its role as a gauge of monetary policy and dollar strength is likely to solidify, reshaping how investors view its utility.

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