Bitcoin’s behavior diverges from that of “digital gold” as correlations with actual gold and the US dollar have diminished significantly.

In 2025 and early 2026, Bitcoin’s actions have shifted from being viewed as “digital gold” to becoming more dependent on prevailing regimes. At times, it behaves like a tech beta, at other moments like a trade influenced by rates and liquidity duration, and only occasionally does it function as a hedge.

The key narrative revolves around which macro regime will dictate the dominant identity next.

The context is significant. On January 28, the Federal Reserve maintained the Fed funds target range at 3.5% to 3.75%, emphasizing a “watch incoming data” approach rather than a straightforward easing support.

The IMF’s January 2026 forecast anticipates a 3.3% global growth rate in 2026, with “technology investment and accommodative financial conditions” counterbalancing trade challenges, a scenario that typically keeps equity and tech risk factors pertinent.

In this context, Bitcoin’s correlations reveal which identity is currently in play.

CME Group highlights that the correlation between crypto and the Nasdaq 100 in 2025 and early 2026 has been notably strong, ranging from +0.35 to +0.6, while Bitcoin’s correlations with gold and the US dollar have diminished to approximately zero in recent years.

This marks a departure from 2022 and 2023, when Bitcoin’s negative correlation with the US dollar reached around –0.4. In this current regime, Bitcoin is trading less as a macro hedge and more as a liquidity-sensitive tech risk factor.

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Three identities, and when does Bitcoin behave like each one of them

The hedge identity suggests that Bitcoin should gain when the dollar declines or when investors look for a store-of-value alternative with characteristics similar to gold.

High-beta tech refers to Bitcoin’s behavior as a leveraged counterpart to the Nasdaq 100 during both risk-on and risk-off periods.

Liquidity sponge indicates that Bitcoin absorbs and reflects shifts in financial conditions, such as ETF flow reversals, funding circumstances, reserves, and cash facilities, acting as the first asset to be repriced when liquidity tightens or loosens.

This concept remains relevant if viewed as three identities that Bitcoin rotates among, rather than a singular “true” identity. The rotation is contingent on the macro regime, which can be measured.

The assertion of “digital gold” has weakened recently. CME’s analysis is straightforward: Bitcoin’s rolling correlation with gold has never been particularly high, peaking at +0.41 on a rolling 12-month basis during the quantitative easing period, and has hovered near zero since 2024.

Bitcoin’s negative correlation with the dollar, which reached about -0.4 in 2022 and 2023, has also diminished toward zero by 2025 and early 2026.

The hedge identity is not extinct, but it is currently inactive. In the present regime, Bitcoin does not decouple from the dollar when it weakens, nor does it follow gold’s movements.

For the high-beta tech identity, the evidence is most compelling. CME notes that crypto has maintained a consistently positive correlation with the Nasdaq 100 since 2020, and in 2025 and early 2026, it often falls within the +0.35 to +0.6 range.

During “AI-risk-on and risk-off” days, Bitcoin behaves like an equity risk factor, frequently declining more than tech during sell-offs. High beta operates in both directions: Bitcoin amplifies Nasdaq gains on the way up and exacerbates losses on the way down.

This identity prevails when growth is stable, and financial conditions remain favorable.

For the liquidity sponge identity, rates may remain flat while liquidity continues to fluctuate. BlackRock posits that Bitcoin has historically exhibited sensitivity to real dollar rates, akin to gold and emerging-market currencies.

Consequently, “slower cuts or higher real yields” can exert pressure on Bitcoin even in the absence of new policy shocks. FRED provides clear public series to anchor “plumbing”: the Fed balance sheet and reverse repo facility usage.

Bitcoin can act as a liquidity sponge when the marginal buyer or seller is driven by flow, irrespective of the headline policy rate.

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Scenarios and what to watch

As Bitcoin grapples with its identity, various scenarios may unfold.
The first is “risk-on tech beta,” which serves as the baseline if growth remains stable and financial conditions are supportive.

Bitcoin’s identity would align with high-beta tech dominance if its rolling correlation with the Nasdaq stays elevated in the +0.35 to +0.6 range. Additionally, correlations with gold and the dollar would remain weak, around zero.

In this scenario, Bitcoin is not hedging but rather participating in the same risk complex as tech equities.

The second scenario involves “sticky inflation and higher real yields,” assuming the policy rate remains unchanged while real yields increase.

Bitcoin’s identity would transition to a liquidity and real-rate duration trade, with rising real rates and tighter financial conditions coinciding with Bitcoin drawdowns.

Reverse repo and other plumbing indicators suggest tighter reserve and liquidity conditions. Bitcoin behaves like a long-duration asset during sell-offs when the discount rate increases, even if nominal rates do not fluctuate significantly.

The third scenario is a “shock regime,” characterized by trade disruptions, geopolitical tensions, or a credit event.

Initially, Bitcoin’s identity would see correlations surge, with a potential “hedge” narrative reemerging later, and cross-asset correlations would increase during the initial shock as risk positions are unwound.

Post-shock, if the dollar weakens and monetary or fiscal support increases, Bitcoin may regain “hedge-like” behavior. However, this must be assessed rather than assumed.

The regimes of 2022 and 2023 demonstrated that Bitcoin could act more like a hedge when macroeconomic stress coincided with dollar weakness, but this is not guaranteed.

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Myth-busting and what actually changes

Investors should shift their focus from debating what Bitcoin is to analyzing its actual performance.

Correlations, real-rate sensitivity, and flow channels are measurable and update more rapidly than narratives. CME notes that other significant tokens are highly correlated with Bitcoin, often in the +0.6 to +0.8 range, indicating that Bitcoin’s identity shift influences the entire complex.

The institutional market structure enhances macro transmission. ETF flows can amplify movements in both directions: providing an easy entry and exit.

The liquidity sponge identity is increasingly relevant as institutional access is bidirectional.
Real rates are important, but so are plumbing and flows.

The Federal Reserve’s balance sheet, reverse repo usage, and money stock are publicly accessible series that monitor financial plumbing. When these tighten or loosen, Bitcoin quickly adjusts its price.

“Bitcoin is an inflation hedge.” This may be true at times, but recent correlations with gold and the dollar have weakened. Do not assume hedge behavior without supporting data. Evidence from 2025 and early 2026 suggests that Bitcoin behaves more like a technology risk factor.

“Bitcoin decouples when the USD falls.” This was more applicable in 2022 and 2023 than in 2025 and early 2026, according to CME’s analysis of dollar correlations.

“Rates are the only macro driver.” While real rates are significant, so are plumbing and flows. BlackRock’s framework for real-rate sensitivity, along with reverse repo and Federal Reserve balance sheet indicators, suggests that liquidity conditions can influence Bitcoin independently of the headline policy rate.

What's at stake

Bitcoin’s identity crisis in 2026 is not merely a philosophical discussion. Rather, it represents an empirical rotation among three quantifiable regimes.

The current regime favors the high-beta tech identity, with liquidity sensitivity as a secondary factor and hedge behavior largely inactive.

This situation can change, and the indicators are observable: shifts in correlation, movements in real rates, ETF flows, and plumbing metrics.

The forthcoming regime will determine which identity prevails, and the data will reveal the answer before it becomes part of the narrative.

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