A striking detail? The strong correlation between Bitcoin and Nvidia has come into sharper focus — fueling the rally and reshaping investment strategies.

Dollar Index Drops, Bitcoin Rebounds

The U.S. Dollar Index (DXY) fell to 97.27, its lowest level since February 2022, driven by rising expectations of a Federal Reserve rate cut in July and weaker housing and consumer sentiment data.

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As financial conditions ease, risk-on sentiment dominates. Bitcoin has responded with a near 10% recovery from its weekend lows. “DXY is now at its lowest since March 2022. This is very bullish for global money supply and Bitcoin,” noted Bitwise Europe research head Andre Dragosch.

Nvidia Hits Record High As Nasdaq Signals Bull Rally

Meanwhile, Nvidia — the AI giant and tech bellwether — soared by 4.33% to reach an all-time high of $154.30. The 90-day correlation between BTC and Nvidia now stands at 0.80, reflecting a robust positive link.

The surge followed a golden cross pattern in Nasdaq futures, a strong bullish technical signal suggesting further upward momentum.

Bond Yields and Consumer Data Indicate Recession Risk

Yields on 2-year U.S. Treasury notes dropped to 3.76%, while 10-year yields slipped to 4.27%. This steepening of the yield curve often precedes economic contractions.

Consumer confidence also dropped sharply, with the expectations index falling to 69 — well below the recession-warning threshold of 80. Combined with sliding oil prices and dovish signals from Fed officials, traders are increasingly pricing in a July rate cut.

Bitcoin stands to benefit from this shift in monetary policy outlook.

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“I wouldn’t be surprised to wake up and hear that the tariffs have been postponed,” said Ackman, implying that Trump could use the delay to make more “deals.”

You Might Be Interested In: Elon Musk Talks About the Name of a New Memecoin!

On April 2, Trump signed an executive order imposing a 10% baseline tariff on all imports. Following this move, during the April 4 trading session, the U.S. stock market lost more value than the entire crypto market is currently worth. Interestingly, Bitcoin and the broader crypto space showed greater resilience than traditional equities.

Support from BitMEX and Gemini Founders!

BitMEX co-founder Arthur Hayes and Gemini co-founder Cameron Winklevoss publicly supported Trump’s trade policy. While opinions in the crypto space remain mixed, Ackman sees the tariffs as a “necessary” move to protect American workers and industry.

Ackman also issued a warning:

“The immediate implementation of these tariffs may catch businesses off guard and could push the U.S. economy into a severe recession.”

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A report released by the US Commerce Department on Friday indicated a slight slowdown in consumer spending last month. The easing price pressures and cooling labor market could bolster the Fed’s confidence that inflation is moving towards its 2% target.

The Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation gauge, rose 0.1% in June, following a flat reading in May. This suggests that inflationary pressures may be easing.

“The key question now is whether the positive momentum we’ve seen over the last three months will continue through to the September meeting,” said Olu Sonola, chief US economist at Fitch Ratings. “While the Fed will have one eye on recent labor market developments, it’s likely to use the upcoming meeting to set the stage for a rate cut in September.”

Kathy Bostjancic, chief economist at Nationwide, noted that the improving inflation data suggests that the surge in inflation seen in the first quarter was transitory. “Moreover, if rent inflation has finally peaked as the latest data suggests, then inflation appears to be returning to a more sustainable downward trend,” she said.

As demand in the economy has cooled in response to the Fed’s aggressive monetary policy tightening in 2022 and 2023, the pace of economic growth has slowed. While the economy grew at an average annual rate of 2.1% in the first half of this year, it expanded at a 4.2% pace in the second half of 2023.

Economists at Bank of America Securities estimate that approximately $400 billion of excess savings accumulated during the COVID-19 pandemic remains, but at the current pace of depletion, it could be exhausted by the end of the year.

“Elevated savings have been supporting consumer spending and likely encouraged more saving for precautionary reasons,” said Veronica Clark, an economist at Citigroup. “But overall spending seems to be slowing more than income, which is consistent with lower saving. Conversely, a very low savings rate could signal the risk of a sharper decline in spending as the labor market weakens.”

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