Bitcoin
The firm’s comments come as the cryptocurrency continues to correct below $70,000, down more than 23.7% year-to-date.
Geopolitical unrest and energy disruptions, particularly from the U.S.-Iran conflict choking the Strait of Hormuz, have driven oil and gas prices higher in recent weeks. That surge has put pressure on inflation expectations, causing markets to walk back earlier bets on Federal Reserve rate cuts.
On prediction markets including Polymarket and Kalshi, the perceived odds of the Fed cutting interest rates this year went from near-certainty to doubtful. Traders are now pricing in a near 40% chance that rates aren’t cut at all, up from less than 3%.
“Energy prices remain closely linked to inflation expectations,” said Luke Deans, senior research associate at Bitwise. “The recent surge has led to a meaningful shift in monetary policy pricing, with previously anticipated Federal Reserve rate cuts for the year largely reversing toward expectations of renewed tightening.”
While equities have started to fall in response, with the S&P 500 index losing nearly 8% over the past month, Bitwise argues that bitcoin has already adjusted. The cryptocurrency has been drifting lower since October 2025, reflecting its sensitivity to liquidity and investor risk appetite.
“Bitcoin, a highly reflexive and liquidity-sensitive asset, typically responds earlier to shifts in risk appetite,” Deans said. This suggests that digital assets began reflecting tighter financial conditions ahead of many traditional risk assets. Relative valuation indicators further reinforce this dynamic.”
One indicator, the Mayer Multiple, which compares bitcoin’s spot price to its 200-day average, has sat in the lower percentiles of its historical range since January, Deans said. That suggests BTC has already endured a broad reset in expectations.
In contrast, he said, equities entered the year “at elevated valuation levels and have only more recently begun to reprice as macro conditions deteriorated.”
“Historically, assets that have undergone substantial valuation compression tend to exhibit reduced downside sensitivity as leverage and speculative positioning are progressively unwound,” Deans told CoinDesk. “Alternatively, markets trading closer to cyclical highs often retain greater vulnerability to negative macro catalysts.”
Within crypto, bitcoin’s dominance has tightened the market structure. Bitwise noted that correlations across altcoins have surged, pointing to a single-factor environment driven by BTC’s price.