Bitwise said Bitcoin has been quicker than equities to absorb the impact of shifting monetary policy expectations as higher energy prices feed inflation concerns. The firm noted that the probability of no Federal Reserve rate cut this year has risen to 40%, a sharp change from earlier market confidence that easing was likely.
Energy-driven inflation fears reshape rate expectations
In recent weeks, tensions between the United States and Iran, especially around the Strait of Hormuz, have disrupted supply and lifted geopolitical risk. Oil and natural gas prices moved higher, and inflation expectations followed. Bitwise senior research analyst Luke Deans said the connection between energy prices and inflation forecasts is strong, and that recent gains have materially changed how markets price monetary policy. In his view, most of the rate cuts once expected for the year have now been priced out.
The article cites prediction markets Polymarket and Kalshi as showing that confidence in lower rates has faded. For risk assets, that change affects more than sentiment. It changes valuation assumptions across markets.
Bitcoin reacts earlier than traditional markets
Bitwise argues that Bitcoin, because of its sensitivity to liquidity conditions and shifts in risk appetite, tends to adjust before conventional assets do. Deans said digital assets often reflect tighter financial conditions ahead of the curve. The report notes that the S&P 500 has fallen about 8% over the past month, while Bitcoin had already been reflecting these pressures earlier.
According to the report, Bitcoin has been in a declining trend since October 2025. Bitwise interprets that move as an earlier repricing of liquidity and macro risk, while equities, which started the year at relatively elevated valuations, have been slower to catch up.
Mayer Multiple stays near the lower end
Bitwise also pointed to the Mayer Multiple, which compares Bitcoin’s spot price with its 200-day average. Since January, that indicator has remained near the lower end of its historical range. Deans said this suggests expectations across the crypto market are being reset. Assets that have already gone through deep declines and a reduction in leverage and speculative positioning tend to show more resilience when new downside pressure appears. Markets that remain more richly priced without that clearing process can be more exposed.
Bitcoin dominance continues to strengthen
The firm added that Bitcoin’s share of the crypto market has increased, while altcoin price movements have shown a high level of correlation. In Bitwise’s view, that points to a more unified market structure in which Bitcoin is becoming the main driver of price action across digital assets.