Bitcoin Mirrors Liquidity Cycles, Not Inflation, Says NYDIG

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NYDIG Says Bitcoin Acts as Liquidity Gauge, Not Inflation Hedge

Bitcoin’s reputation as “digital gold” may be overstated, according to new research from NYDIG.

In its weekly market note, Greg Cipolaro, NYDIG’s Global Head of Research, reported that Bitcoin’s correlation with inflation has been weak and inconsistent. “While Bitcoin is often described as an inflation hedge, the data doesn’t strongly support that narrative,” Cipolaro wrote.

Even gold, the traditional inflation hedge, shows similar inconsistencies. Historical data reveals that gold’s correlations with inflation are often negative, challenging long-held assumptions about its performance in rising-price environments.

Instead, both Bitcoin and gold appear more responsive to real interest rates and global liquidity trends. As real rates fall, gold tends to rise — a pattern Bitcoin is increasingly following as it becomes more tied to macroeconomic dynamics.

Cipolaro concluded that investors should view Bitcoin as “a liquidity barometer” rather than a hedge against inflation, while gold continues to serve primarily as a hedge against real rates.