Bitcoin’s halving highs keep shrinking
Bitcoin is now dancing to a different beat
Now, let’s forget mining cycles for a moment. Bitcoin’s real rhythm may now be set by inflation expectations!
Recent data shows that BTC’s price increasingly mirrors the 5-year and 10-year breakeven inflation rates, which represent market forecasts for future inflation.
These BIRs are derived from the yield spread between nominal treasuries and TIPS, and they’ve become a crucial sentiment barometer.
Source: Alphractal
When BIR rises, it signals higher expected inflation, often leading investors to seek alternatives to fiat… cue Bitcoin’s appeal as a hedge.
Historically, BTC has been greatly detached from macro metrics. But since 2020, its price has tightly correlated with inflation expectations, reacting more to Powell’s tone than to hash rate halvings.
This alignment signals a maturing asset, one that’s increasingly part of broader economic recalibrations. In short: Bitcoin is growing up, and its sensitivity to the BIR proves it’s no longer immune to the central bank.
Bitcoin was meant to defy — created as a hedge against the failures of traditional finance and the threat of runaway inflation. But in 2025, its behavior tells a different story.
Instead of acting as a pure inflation hedge, Bitcoin has become increasingly sensitive to the very forces it once aimed to escape: Federal Reserve policy, liquidity cycles, and real interest rates.
This isn’t necessarily a contradiction. As institutional adoption has surged and macro-aware capital has flooded in, Bitcoin’s price action now echoes shifts in policy tone, not just mining mechanics or CPI prints.
Rate hikes dry up flows; non-aggressive pivots reignite them. It’s more reflexive, more entangled.
But this evolution raises complex questions: Can Bitcoin still be considered “digital gold” if its value fluctuates with the same macro levers that drive equities?
Or has it become a liquidity sponge; an asset that soaks up excess capital in easy-money regimes, only to retreat when real rates rise?
Its core hasn’t changed. But the market it trades in — and the way it’s priced — has. Bitcoin may still be a hedge, but it’s one that now listens closely to the Fed.
And that’s the price of maturity.