Bitcoin Rallies on Weakening Case for US Monetary Tightening

Bitcoin's latest rally is driven by improving macroeconomic conditions rather than crypto-specific factors. According to CoinShares, recent economic data have weakened the case for further US monetary tightening.

The firm noted that calmer inflation and weaker payroll data have increased expectations that the Federal Reserve (Fed) could move toward a less restrictive policy stance. This shift in rate expectations is supportive of Bitcoin due to its sensitivity to changes in liquidity expectations and real yields.

CoinShares pointed out that short-dated yields have declined, indicating investors no longer price in additional Fed rate hikes. However, longer-dated yields have continued to rise, reflecting growing concerns about the US fiscal position.

The firm expects Bitcoin to remain range-bound for now, with $80,000 as key resistance. A decisive move above that level could require clearer Fed confirmation that the risk of further tightening has diminished.