Bitcoin Finds Footing Amid Ongoing Headwinds

Bitcoin's price has rebounded from its lows, with prices stabilizing near $85,000 despite ongoing macro headwinds. The cryptocurrency's price fell from last year's highs into the spring, with another decline in early summer to a low of around $60,000. However, a massive liquidation of short positions triggered by the Treasury's announcement of longer-dated bond repurchase support pushed prices up nearly $10,000 in a short time.

Although the Clarity Act, which aimed to define regulation for crypto markets, did not proceed to a vote, the market absorbed the disappointment and maintained its price. This is despite higher yields, a Fed rate hike, and signals of future hikes. Large increases in transaction volumes and blockchain usage across major protocols, as well as investments from large institutions, also support the market.

The correlation between Bitcoin and other asset classes has also changed, with the 'Debasement' trade supporting non-dollar stores of value like gold and Bitcoin. The correlation between Bitcoin and gold, which is a key barometer of sentiment towards the US dollar, has increased but remains at a level where the two assets are diversifying from each other.