What Does It Take for the Bullish to Regain Control of Bitcoin? Here Is the Answer

Weak employment data from the United States, new tariffs, the war in Europe and the Middle East, along with the political crisis in France, have increased global instability this week. While gold is rising to record highs, Bitcoin continues to maintain a high correlation with the technology-oriented Nasdaq 100 index. The cryptocurrency research company Ecoinometrics, in its assessment of X, stated: "The correlation mechanism of Bitcoin remains tied to risky assets. The separation into digital gold has not yet occurred." Data shows that the correlation between Bitcoin and gold is almost zero. It also has almost no correlation with U.S. Treasury bonds, which are considered a traditional safe haven. However, Ethereum trades more closely with risk assets than Bitcoin. The market will be watching the Fed's meeting next week. According to Ecoinometrics, macroeconomic instability must ease for the bull market to regain momentum. "The best-case scenario is that the Fed will confirm that they will continue to commit to the interest rate cut path or accelerate this process," the report noted. However, if the opposite occurs - a "hawkish" surprise - then both technology stocks and Bitcoin are expected to be heavily impacted. André Dragosch, Head of European Research at Bitwise, also stated that the volatility in the cryptocurrency market is due to macro events: "The current weak performance is not due to micro events, but rather due to declining global growth expectations and a decreased risk appetite among investors." However, Dragosch stated that he remains optimistic about the medium and long-term outlook: "I am still very optimistic as global liquidity growth is accelerating. The Fed's continued rate cuts and ongoing easing of financial conditions could create a positive environment for the market." However, Dragosch noted that the downside risks are still present in the short term, stating that the Fed meeting has become a "double event" for Bitcoin: "A sharp cut will cause risk assets to soar, and if the moderate expectations do not meet expectations, Bitcoin will be pulled down along with technology stocks."