Bitcoin Now Hedge Against TradFi and US Treasury Risk, Says Standard Chartered | US Crypto News

Welcome to the US Morning Crypto News Briefing—your essential rundown of the most important developments in crypto for the day ahead.

Grab a coffee to see what experts say about Bitcoin (BTC) amid prevailing market turmoil caused by Trump’s tariffs and broader macroeconomic events. BeInCrypto reported that the status of Bitcoin as a hedge against economic uncertainty is coming under scrutiny. Now this view is becoming increasingly tangled.

Bitcoin Price Closes In On $89,000 While Traditional Markets Slide

On Monday, the S&P 500 and Nasdaq extended their declines, while the US dollar index (DXY) also fell to a 3-year low. The turnout highlighted a divergence in performance between crypto and equities.

S&P500, Nasdaq, and US DXY price performances. Source: TradingView

“Only 6 times since the 1970s have the DXY and SPX fallen together: 70s stagflation, Gulf War, Greenspan hikes, the dot-com crash, 9/11… Buyback window opens Friday for US corporates,” VanEck Head of Digital Assets Research Mathew Sigel commented on X.

The selloff in equities came amid heightened political tension and renewed concerns over the Federal Reserve’s (Fed) independence. President Donald Trump escalated his criticism of Fed chair Jerome Powell.

“Powell’s termination cannot come fast enough!” the President wrote on Truth Social.

The post followed earlier remarks hinting at Powell’s potential removal, an idea reportedly being reviewed by Trump’s economic advisors.

Trump also suggested the economy would slow unless interest rates were cut immediately. The bone of contention between Trump and Powell is that while the president pushes for interest rate cuts, the chair advocates a more cautious stance.

Market reaction was swift:

• The Dow Jones Industrial Average plunged 971.82 points (2.48%) to 38,170.41.
• Nasdaq Composite fell 2.55% to 15,870.90.
• The S&P 500 dropped 2.36% to close at 5,158.20.

The so-called “Magnificent Seven” tech stocks were hit hardest.

• Tesla sank 5.8%
• Nvidia slid more than 4%
• Amazon and Meta both dropped around 3%.
• Industrial heavyweight Caterpillar also lost 2.8%.

Meanwhile, Bitcoin is bucking the trend, steadily approaching the $89,000 threshold while traditional markets slide. A decisive move above this level could see the pioneer crypto hit the $90,000 target highlighted in Monday’s US Crypto News briefing.

Bitcoin (BTC) Price performance. Source: BeInCrypto

Historically, Bitcoin’s performance has shown an inverse correlation with the DXY. This prompts speculation that a pivotal moment for the pioneer crypto may be on the horizon.

“The DXY has broken down to March 2022 levels. Bitcoin is back on the move,” highlighted analyst Ben Werkman.

BeInCrypto contacted Geoff Kendrick regarding the Bitcoin price outlook as traditional finance (TradFi) shows weakness. The Head of Digital Asset Research at Standard Chartered said Bitcoin’s resilience signals a shift in how investors perceive the digital asset.

In his opinion, the king of crypto is now increasingly seen as a hedge against risks in TradFi and US Treasuries.

“I think Bitcoin is a hedge against both TradFi and US Treasury risks. The threat to remove US Federal Reserve Chair Jerome Powell falls into Treasury risk—so the hedge is on,” Kendrick told BeInCrypto.

This sentiment aligns with a recent report when US 10-year treasury yields fell below 4%. The incident signaled a potential shift in Fed policy and sparked renewed interest in Bitcoin and other risk assets.

Sentiment is Improving for Crypto, Bitwise Europe Analysts Say

According to the Tuesday Newsletter from Bitwise Europe, the firm’s proprietary Cryptoasset Sentiment Index has flipped to a “slightly bullish” reading.

“At the moment, 8 out of 15 indicators are above their short-term trend. Exchange inflows and the BTC funding rate have both improved since last week,” Bitwise analysts noted.

Bitwise also noted a continued high correlation between Bitcoin and altcoins, which suggests that a surge in Bitcoin’s price could spill over to other tokens. According to the newsletter, around 20% of tracked altcoins outperformed Bitcoin over the past week.

On the TradFi side, Bitwise reported a marginal uptick in Cross Asset Risk Appetite (CARA), which rose from -0.59 to -0.43. CARA is the firm’s proprietary gauge of market sentiment across traditional asset classes.

While the CARA index is still subdued, it points to a modest rebound in risk appetite. This renewed interest aligns with Kendrick’s view that Bitcoin’s number one purpose in a portfolio is to hedge against risks to the existing financial system.

“Bitcoin’s number one purpose in a portfolio is as a hedge against risks to the existing financial system, due to its decentralized ledger, and this can play out via two routes, as private sector risks like the March 2023 SVB collapse and risks associated with the government sector, such as US Treasury risks,” Kendrick told BeInCrypto.

The Standard Chartered analyst said the current threat to the Fed’s independence via Powell’s potential replacement falls squarely into the second of these categories.

“In terms of what is measurable the current threat plays out via US Treasury term premium, which is now at a 12-year high, 10Y term premium,” he added.