From 2025 to early 2026, Bitcoin’s behavior became less “digital gold” and more regime-dependent. Sometimes it trades like technology beta, sometimes it trades like duration trades on rate and liquidity, and sometimes it trades only intermittently like a hedge.
The real story is which macro-regime will let which identity dominate next.
Setup is key. On January 28, the Federal Reserve maintained its federal funds target range at 3.5% to 3.75%, reinforcing its stance of “watching future data” rather than aiming for complete easing.
The IMF’s January 2026 update forecasts global growth of 3.3% in 2026, with “technology investment and accommodative financial conditions” offsetting trade headwinds, and an environment where equity and technology risk factors tend to remain relevant.
Against this background, Bitcoin’s correlation shows which identity is dominant.
CME Group points out that from 2025 to early 2026, the correlation between cryptocurrencies and the Nasdaq 100 was very strong at +0.35 to +0.6, while the correlation between Bitcoin and gold and the US dollar has weakened to almost zero in recent years.
This is a change from 2022 and 2023, when the inverse correlation between Bitcoin and the US dollar reached approximately -0.4. In this regime, Bitcoin trades as a liquidity-sensitive technology risk factor rather than a macro hedge.
Three identities and when will Bitcoin behave like each one?
Hedging means Bitcoin benefits when the dollar weakens or when investors seek a store-of-value hedge with gold-like properties.
High beta technology refers to Bitcoin’s behavior as a leveraged cousin of the Nasdaq 100 on risk-on and risk-off days.
A liquidity sponge means that Bitcoin absorbs and reflects changes in financial plumbing such as reversals in ETF flows, funding conditions, reserves and cash facilities, and acts like the first asset whose price changes when liquidity tightens or loosens.
This work is evergreen if we treat these as three identities that Bitcoin circulates around, rather than one “true” identity. The rotation is dependent on the macro regime, which is measurable.
The case for “digital gold” has weakened recently. The CME framework is straightforward. The rolling correlation between Bitcoin and gold has never been high, peaking at +0.41 on a rolling 12-month basis during the quantitative easing era, and dropping to almost zero after 2024.
Bitcoin’s negative dollar correlation, which reached around -0.4 in 2022 and 2023, has also weakened towards zero by 2025 and early 2026.
Hedge’s identity is not dead, but it is dormant. Under the current system, Bitcoin is not decoupled from the dollar and does not track the movement of gold even if the dollar falls.
The strongest evidence exists for high-beta techniques. CME notes that cryptocurrencies have consistently shown a positive relationship with the Nasdaq 100 since 2020, often in the +0.35 to +0.6 range from 2025 to early 2026.
In the era of “AI risk-on and risk-off,” Bitcoin trades like a risk factor in stocks, often falling more than when tech stocks crash. High beta cuts both ways. Bitcoin magnifies Nasdaq’s gains on the way up, and magnifies losses on the way down.
This is the dominant identity when growth is sustained and financial conditions are supportive.
In the case of a liquidity sponge, rates can remain flat while liquidity is still fluctuating. BlackRock argues that Bitcoin has historically been sensitive to the dollar’s real rate, similar to gold and emerging market foreign exchange.
As a result, even if no new policy shocks occur, “slower interest rate cuts and higher real yields” could put pressure on Bitcoin. FRED offers a clean public series to anchor the “plumbing” of the Fed’s balance sheet and use of reverse repo facilities.
Bitcoin can behave like a liquidity sponge if the marginal buyers or sellers are flow-driven, regardless of the headline policy rate.
Scenarios and highlights
Bitcoin is struggling to decide which identity to adopt, but there are a variety of possible scenarios.
The first is a “risk-on technology beta,” which serves as the base case if growth is sustained and financial conditions remain strong.
If the rolling correlation with the Nasdaq remains elevated in the +0.35 to +0.6 range, Bitcoin’s identity will become a high-beta technology advantage. Additionally, the correlation with gold and the dollar remains weak, close to zero.
Rather than being a hedge, Bitcoin is part of the same risk complex as tech stocks.
The second scenario is “sticky inflation and rising real yields,” which assumes that real yields rise while the policy rate remains stable.
Bitcoin’s identity will shift to liquidity and real rate duration trading, and a Bitcoin drawdown will coincide with an increase in real rates and a tightening of financial conditions.
Reverse repos and other plumbing proxies present more stringent reserve and liquidity requirements. Even if nominal interest rates don’t move much, Bitcoin will be sold like a long-term asset when the discount rate increases.
The third scenario is a “shock regime” involving trade disruption, geopolitical escalation, or credit events.
For Bitcoin’s identity, correlations will initially spike, and later a potential “hedging” narrative will resurface, and correlations between assets will rise during the initial shock as the risk book runs out of gross.
If the dollar weakens after the shock and monetary and fiscal support increases, Bitcoin could resume its “hedging” behavior. However, this should be measured rather than assumed.
The 2022 and 2023 regimes showed that Bitcoin may act more as a hedge if macroeconomic stress and dollar weakness combine, but this will not happen automatically.
Breaking the myths and what actually changes
Investors should stop arguing about what Bitcoin is and start measuring what Bitcoin is doing.
Correlations, real-rate sensitivities, and flow channels are observable and update faster than the narrative. CME notes that the change in Bitcoin’s identity is dragging down the complex, as other major tokens have high correlations with Bitcoin, often in the +0.6 to +0.8 range.
Institutional market structures increase macro transmission. ETF flows can amplify movements in both directions: easy entry and easy exit.
The identity of the liquidity sponge is now more important because institutional access is two-way.
Actual price is important, but so are piping and flow.
The Federal Reserve Balance Sheet, Reverse Repo Usage, and Money Stock are publicly available series that track financial plumbing. When these tighten or loosen, Bitcoin’s price quickly rebounds.
“Bitcoin is an inflation hedge.” Although it has happened from time to time, the correlation between gold and the dollar has weakened recently. Don’t assume hedging behavior without data. Evidence from 2025 and early 2026 points to Bitcoin acting as a technology risk factor.
“Bitcoin decouples when the US dollar falls.” According to CME’s dollar correlation discussion, this was more true in 2022 and 2023 than in 2025 and early 2026.
“Interest rates are the only macro factor.” Real rates are important, but so are piping and flow. In addition to BlackRock’s real interest rate sensitivity framework, reverse repos and Federal Reserve balance sheet proxies indicate that liquidity conditions can move Bitcoin independently of headline policy rates.
what is the problem
Bitcoin’s 2026 identity crisis is not a philosophical debate. Instead, it is an empirical rotation between three measurable regimes.
The current regime favors a high-beta technology identity, with liquidity sensitivity being a secondary factor and hedging behavior largely dormant.
It can change, and evidence such as changes in correlations, real rate movements, ETF flows, plumbing indicators, etc. is observable.
The next regime will reveal which identities are in control, and the answers will appear in the data before they appear in the story.
(Tag Translation) Bitcoin
