Inflation may not move Bitcoin’s price as much as many assume — but a weakening U.S. dollar tends to lift it alongside gold, according to NYDIG.
“The community likes to pitch Bitcoin as an inflation hedge, but the data just doesn’t strongly support that argument,” said Greg Cipolaro, NYDIG’s global head of research, in a Friday note.
Cipolaro explained that Bitcoin’s correlations with inflation metrics are inconsistent and generally weak. While inflation expectations provide a slightly better signal, he said they still show little meaningful connection to Bitcoin’s price.
Although Bitcoin advocates have long promoted it as “digital gold” and a hedge against inflation thanks to its fixed supply and decentralized nature, the asset has become increasingly tied to broader financial markets in recent years.
Even gold itself isn’t a reliable inflation hedge, Cipolaro added, noting that the metal has often shown an inverse relationship with inflation — an outcome he described as “surprising for an inflation protection hedge.”
However, both gold and Bitcoin tend to benefit when the U.S. dollar loses strength. “Gold has typically risen as the dollar falls, as measured by the U.S. Dollar Index,” Cipolaro said. “Bitcoin also shows an inverse correlation to the dollar. While that relationship is newer and somewhat less consistent than gold’s, the trend is clear.”
Cipolaro noted that NYDIG expects Bitcoin’s inverse relationship with the U.S. dollar to strengthen as the cryptocurrency becomes increasingly integrated into the traditional financial system.
Interest rates and money supply drive Bitcoin’s moves
According to Cipolaro, the two key macroeconomic factors influencing both Bitcoin and gold are interest rates and the money supply.
Historically, gold has tended to rise when interest rates fall and decline when they rise — a pattern that Cipolaro said has “emerged and strengthened over time” for Bitcoin as well.
He added that global monetary policy has maintained a “persistently positive” and strong connection to Bitcoin, with looser policy environments generally supporting price gains.
Cipolaro said the similar ways in which Bitcoin and gold respond to broader macroeconomic forces highlight Bitcoin’s “growing integration into the global monetary and financial landscape.”
“In macro terms,” he concluded, “gold acts as a hedge against real interest rates, while Bitcoin has evolved into a barometer of market liquidity.”
