Bitcoin’s Bull Run Ignites as Dollar Tanks & Nvidia Soars—Recession Winds Fuel Crypto Fire
DXY craters, NVDA moons, and BTC smells blood. The perfect storm for crypto’s next leg up—or just another trap for overleveraged degens?
Dollar in freefall: The greenback’s slump sends capital fleeing toward hard assets. Sound familiar, gold bugs?
Nvidia’s AI hype machine: Another ATH for the tech bellwether, yet GPU miners still can’t ROI. Funny how that works.
Recession playbook: Weak macro = Fed pivot hopes. Traders front-run stimulus like it’s 2020 again—this time with more institutional bagholders.
Cynical take: Wall Street’s ‘risk-on’ flip lasts exactly until their quarterly bonuses clear. Enjoy the volatility, folks.
BTC and NVDA correlation
Meanwhile, shares in Nvidia (NVDA), a bellwether for all things AI and emerging technologies, rose 4%.33% Wednesday, hitting a record high of $154.30.
Both NVDA and BTC bottomed out in late 2022 and have been in an uptrend ever since. As of the time of writing, the 90-day correlation coefficient between NVDA and BTC was 0.80, indicating a strong positive relationship between the two assets.
NVDA's record high came a day after the Nasdaq futures formed a bullish golden cross, signaling a continued risk-on rally.
Bonds teasing recession
The yield on the U.S. two-year note, which is more sensitive to interest rate expectations, dropped to 3.76% early today, the lowest since May 2. The yield has declined by 24 basis points this month. Meanwhile, the 10-year yield has declined by 16 basis points to 4.27%.
As such, the spread between the 10- and two-year yields has widened in a MOVE known as the steepening of the yield curve.
Historically, recessions have begun with the two-year yield falling alongside a steepening of the yield curve, as noted by wealth advisor Kurt S. Altrichter on X.
"We’re not there yet, but we’re dancing on the edge. The 10Y-2Y spread is bull-steepening. If the 2Y breaks lower, it signals the Fed has lost control. That’s your cue. Watch it closely," Altrichter said.
Consumer expectations signal an impending recession
Consumer confidence dropped last month to a reading of 93, registering a 5.4-point decline from May, with Republican party respondents leading the decline, according to data released by the Conference Board on Tuesday.
More importantly, the expectations index, which represents the short-term outlook, slipped to 69, well below the 80 threshold that typically signals an impending recession.
Traders price in Fed rate cuts
These developments, coupled with the oil price slide and the talk of a July rate cut by some Fed officials, have likely prompted traders to price in an early rate cut by the Fed. According to the CME's FedWatch tool.
According to Bloomberg, interest rate swaps are now pricing around four basis points of easing into the July Fed meeting, up from NEAR zero a week ago. Furthermore, traders anticipate a combined 60 basis points of easing over the remaining four meetings this year, up from 45 basis points a week ago.
