Bitcoin just broke its classic macro correlation because the market is suddenly pricing a terrifying new risk
Bitcoin's correlation broke as Jerome Powell's testimony revealed political pressure on the Fed, introducing 'independence risk' as a new macro factor.Summary
Recent events, specifically Jerome Powell revealing the Fed received grand jury subpoenas and faced threats over testimony, have caused markets to reprice the concept of Federal Reserve independence. This 'independence risk' is a new macro factor that transcends typical rate-hike/rate-cut narratives, causing Bitcoin to react differently than usual. The market is demanding compensation for the uncertainty surrounding whether the central bank's decision-making can be politically influenced. This risk transmits through three channels: the dollar credibility channel (benefiting gold and Bitcoin's anti-establishment narrative), the term premium channel (investors demanding extra compensation for holding long-dated bonds due to rising uncertainty), and the plumbing channel (increased volatility tightening risk budgets and forcing leverage unwinds). This risk becomes particularly tradable as key dates approach in 2026, including the end of Powell's term and Supreme Court arguments related to a Fed Governor. Investors are advised to monitor a 'trust dashboard' focusing on the dollar index (DXY), long-end yields/term premium, and rates volatility (MOVE index) to gauge which channel is dominating Bitcoin's price action.
(Source：CryptoSlate)