According to JPMorgan Private Bank strategists, this divergence is no coincidence. Markets are not reading the current dollar weakness as a permanent macro shift and continue to price Bitcoin as a liquidity-sensitive risk asset rather than a safe haven.

In recent weeks, Bitcoin’s lack of a parallel rise alongside the dollar’s retreat signals a redefinition of the dollar–Bitcoin relationship. JPMorgan suggests the key factor lies in why the dollar weakened in the first place.

Dollar Weakness Is Flow-Driven, Not Macro

JPMorgan strategists emphasize that the recent wave of dollar selling is not rooted in a major change in growth outlook or monetary policy expectations. Instead, the movement is largely driven by short-term capital flows and market sentiment.

Yuxuan Tang, Head of Asia Macro Strategy at JPMorgan Private Bank, told CoinDesk that interest rate differentials have widened in favor of the U.S. dollar since the beginning of the year. This indicates that the dollar’s fundamentals remain intact and the recent decline reflects a temporary sell-off.

The bank notes a similar process occurred last April, with the dollar regaining stability as the U.S. economy picked up pace. This helps explain why markets are not treating the current dollar decline as a lasting regime shift.

Why Bitcoin Didn’t Mirror Gold

Today’s market mirrors last year’s April scenario in several ways. Historically, Bitcoin has gained value when the dollar weakened. This time, the pattern reversed.

The U.S. Dollar Index (DXY) fell about 10% over the past year, while Bitcoin lost roughly 13%. This divergence points to a perceptual shift, according to JPMorgan.

Investors continue to view Bitcoin not as a reliable dollar hedge but as a risk asset sensitive to global liquidity conditions. The prominence of gold and emerging market assets during dollar weakness reinforces this perception.

Bitcoin’s confinement to a narrow price range shows that crypto investors are not interpreting the current dollar decline as a strong macro signal. Without a clear shift in monetary policy, a weaker dollar alone is insufficient to draw new capital into crypto markets.

JPMorgan Framework: Bitcoin Lags in Dollar Diversification

The bank notes that, under current conditions, assets that directly benefit from dollar diversification are more attractive than Bitcoin. In periods of dollar weakness, gold and other precious metals remain the first choice.

Recently, this has proven true: gold maintained its upward trajectory while Bitcoin remained range-bound. JPMorgan suggests Bitcoin’s performance may remain limited until growth expectations or currency dynamics once again become the primary market drivers.

As long as flows and sentiment dominate, the largest cryptocurrency may continue to lag behind traditional macro hedges.

Bitcoin (BTC): $87,957

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Why It Matters?

Japan’s yields have reached the highest levels since the 1990s, impacting not only local markets but also global capital flows directly.

BOJ Bond Yield Hits 1.98%

For decades, Japan maintained near-zero interest rates, supporting global liquidity through yen carry trades. Investors borrowed low-yield yen to invest in higher-return assets abroad.

The expected 25-basis-point increase in December 2025, raising rates to 0.75%, may seem modest, but the speed of the change is critical for markets. Analysts emphasize that the BOJ move has far-reaching implications beyond Japan.

Gold and Silver Prices Surge Amid Rising Risk

Global data shows gold and silver move almost in line with Japanese bond yields. This indicates that investors are seeking protection against rising sovereign debt costs. Meanwhile, gold trades at around 4,324 USD per ounce and silver at approximately 66 USD per ounce in global markets. Since early 2023, gold and silver have gained 135% and 175%, respectively.

The silver market shows speculative behavior. The China Silver Futures Fund traded 12% above the physical metal it tracks, suggesting leveraged demand exceeds the underlying asset. Investors now treat gold and silver as hedges against broader macro risks, not just inflation.

Bitcoin Faces Pressure

Bitcoin is under strain from tightening yen liquidity. According to XWIN Research Japan, “Persistent spot selling occurs across Asian exchanges. Miner reserves are dropping — forced sales, not voluntary…Long-term Asian holders are distributing…Price remains pressured until forced supply clears.”

While US institutions continue buying, forced liquidations in Asia and an 8% drop in Bitcoin hashrate add downward pressure. Previous BOJ rate shifts coincided with major BTC declines, and traders are closely watching for potential downside toward $70,000.

The contrasting reactions of gold, silver, and Bitcoin highlight differences in risk positioning. Gold and silver attract safe-haven flows, while Bitcoin faces liquidation-driven price pressure. Future Fed rate cuts may offset the BOJ’s impact, but the speed of the policy change remains critical.

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Federal Reserve Discusses Inflation and Tariff Risks 

The U.S. Federal Reserve (Fed) made significant decisions during its Federal Open Market Committee (FOMC) meeting on May 6-7, 2025. Officials highlighted that tariffs could increase inflation, creating a challenging dilemma for interest rate policy. The minutes emphasized a cautious approach amid rising economic uncertainties. The Fed kept the federal funds rate steady at 4.25%-4.5%. Officials noted that economic growth remains solid, but risks of labor market weakening have increased. While consumers continue spending, concerns about persistent inflation have grown. Additionally, policy uncertainties are complicating the goals of full employment and low inflation. 

The Fed expressed concerns about variability in trade policies. Tariffs between the U.S. and China eased after the meeting, with both sides suspending heavy taxes for a 90-day negotiation period. This supported a recovery on Wall Street. However, bond yields continued to rise. Powell defended the Fed’s independence against Trump’s pressure for rate cuts. The meeting also reviewed the Fed’s five-year policy framework. Officials evaluated the “flexible average inflation targeting” strategy, noting it could be ineffective during major inflationary shocks. No plans to change the inflation target were announced. 

Trade Policies and Financial Stability Risks 

The Fed discussed the volatile policies of the Trump administration. While tariffs were suspended, they were not fully lifted. Officials noted that bond market volatility could threaten financial stability. Rising Treasury yields may have long-term economic impacts. The risk of both inflation and unemployment rising was emphasized, potentially forcing the Fed into a tough choice between tight monetary policy and supporting growth. Additionally, the Fed renewed dollar and currency swap lines to support global financial stability, aiming to address liquidity needs. 

Post-meeting, Trump delayed 145% tariffs on China, impacting bond yields and recession expectations. Consequently, markets do not expect a rate cut until the September meeting. The Fed is awaiting greater clarity due to policy uncertainties. Officials acknowledged the increasingly complex economic outlook. Inflation nearing the 2% target is making the Fed’s decisions more challenging. Financial market volatility is heightening recession risks. The Fed aims to both control inflation and support growth. 

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“With all this forced selling behind us, this is a classic seasonal pattern where Bitcoin tends to suffer between one to three months after the halves, which occurred in April” VanEck head of digital assets research Matthew Sigel noted in an Aug. 19 interview with CNBC.

For $2.6 billion the German government sold 49,858 Bitcoin in July. Data indicates that many of the creditors of the insolvent cryptocurrency exchange Mt. Gox have held onto their Bitcoin while around 70% of them have been compensated.

Rising Global Liquidity Signals Potential Bull Run

Globally, liquidity is beginning to soar, notes many experts. BitVaulty CEO Francesco Madonna said in an Aug. 17 X post, “Global Liquidity has started to increase, a pattern is forming.” Added pseudonymous crypto trader Kook, “Global liquidity is finally ticking up, will we see the greatest bull run ever in 2025?”

The lack of price motion in Bitcoin surprises investment consultant Lyn Alden somewhat, who notes in an Aug. 19 edition of Natalie Brunell’s Coin Stories podcast that “global liquidity has been flat for two years.” Alden thinks Bitcoin may reach its present all-time high of $73,679 in 2025, when the market moves to a more “pro-liquidity environment.”

Sigel, meanwhile, says that the November U.S. presidential contest will be a turning point for the value of Bitcoin. He contends that macroeconomic circumstances will remain the same for the next many years independent of the election outcome. According to him, we are in for four more years of irresponsible fiscal policies regardless of the candidate who prevails. Sigel said, “We really think it can recover; the history is that Bitcoin really strikes its stride at that point.”

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