Bitcoin’s Role Shifts from Inflation Hedge to Dollar Liquidity Indicator, Reports NYDIG

According to Greg Cipolaro, Global Head of Research at NYDIG, Bitcoin has not demonstrated consistent performance as a traditional inflation hedge. Instead, the cryptocurrency has transformed into a key indicator of liquidity conditions, particularly reflecting fluctuations in the U.S. dollar’s strength. Cipolaro’s analysis reveals that Bitcoin tends to perform strongly during periods of dollar weakness, when global liquidity increases and investors seek alternative assets. This evolving characteristic positions Bitcoin as a barometer for market liquidity rather than a direct counter to consumer price inflation. The findings challenge conventional narratives about Bitcoin’s fundamental value proposition, suggesting its price movements are more closely tied to macroeconomic liquidity trends than to inflation metrics. This insight provides valuable context for institutional and retail investors evaluating Bitcoin’s role in diversified portfolios amid changing monetary policy environments.