According to asset manager Bitwise, it seems that stocks might have already accounted for the effects of tighter monetary policy, which leaves them more vulnerable to recent economic shifts. This observation arises as Bitcoin has decreased by over 23.7% since the start of the year, struggling to maintain levels above $70,000.
Factors like geopolitical tensions and energy supply disruptions, especially linked to the U.S.-Iran situation, have contributed to a recent increase in oil and gas prices. This uptick has heightened inflation expectations, leading to a retreat from earlier assumptions that the Federal Reserve might lower interest rates.
In prediction markets, platforms indicate that the likelihood of the Fed cutting rates has shifted from being highly likely to uncertain. Traders now estimate the chances of any rate reduction this year range from less than 3% to nearly 40%.
“Energy prices are closely tied to inflation expectations,” remarked Luke Deans, a senior research fellow at Bitwise. He noted that the recent rise in prices has significantly modified what was anticipated regarding monetary policy, reversing earlier expectations of rate cuts from the Federal Reserve this year.
In response to these developments, stock prices have begun to decline; the S&P 500 index has dropped almost 8% in just the past month. However, Bitwise suggests that Bitcoin has already made corrective adjustments. The cryptocurrency market has been on a downward trend since October 2025, reflecting sensitivity to liquidity and the risk appetites of investors.
“Bitcoin tends to quickly respond to shifts in risk appetite, given its nature as a highly reactive, liquidity-sensitive asset,” Deans stated, suggesting that digital currencies may already be adjusting to challenging financial environments ahead of more traditional assets. This pattern is bolstered by relative metrics.
One indicator, the Mayer multiple, points out that Bitcoin’s current spot price compared to its 200-day average has lingered in the lower historical range since January, indicating a broad reset of expectations for BTC.
In contrast, stocks started the year with elevated valuation levels, but only recently have begun to appreciate as macroeconomic conditions worsened. Deans noted that historically, assets that have seen significant drops in valuation often prove to be less sensitive to declines as leverage and speculative investments wane. Conversely, markets approaching cyclical peaks tend to be more exposed to negative macroeconomic events.
Within the cryptocurrency landscape, Bitcoin’s dominance is reshaping market dynamics. Bitwise has observed a rising correlation among altcoins, suggesting that BTC prices are influencing the market as a whole.
