Crypto and the macro economy: rates, inflation and the dollar

Why interest rates matter for crypto

Many forces move crypto prices at once. The macro ones are those that also move stocks, bonds and currencies:

An interest rate is the price of borrowing money, and the rate a central bank sets anchors all the others. In the US, the Federal Reserve (the Fed) sets a target range for the federal funds rate, the rate at which banks lend to each other overnight. On 16 September 2026 its Federal Open Market Committee (FOMC) raised that range by a quarter point to 3.75–4.00%, its first increase since July 2023, saying that inflation "remains elevated".

Rates reach crypto through a chain of effects. When Treasury bills, short-term US government debt, pay a decent return with almost no risk, holding an asset that pays no interest and swings sharply costs more in lost opportunity. The Fed explains that lower rates "can make holding equities more attractive"; higher rates work the other way.

Crypto follows the same logic. A working paper from the International Monetary Fund (IMF) found that one common factor explains 80% of the variation in crypto prices, and that Fed tightening pushes it down "through the risk-taking channel", as with equities, "in contrast to claims that crypto assets provide a hedge against market risk".

Liquidity: the tide under every market

Liquidity describes how much money is available and how easily it moves. Central banks influence it through their balance sheets: buying bonds (quantitative easing) adds money to the banking system, and letting those bonds run off (quantitative tightening) drains it. When money is cheap and plentiful, some of it flows into speculative assets.

The Fed's rate history shows how sharply conditions have swung:

After what the IMF calls "the extraordinary central bank crisis responses of early 2020", crypto prices and US stocks "both surged amid easy global financial conditions and greater investor risk appetite". When the Fed raised rates quickly in 2022, the tide went out: the Bank for International Settlements (BIS), the bank for central banks, notes that bitcoin, ether and many other coins fell by around 75% over that year.

Crypto also has liquidity of its own. Stablecoins, tokens designed to hold a steady value against a currency such as the dollar, serve as "a key liquidity parking instrument for crypto trading", in the IMF's words. Borrowed money matters too. After the crypto market peaked at $4.4 trillion in October 2025, automated closures of leveraged positions "triggered liquidation cascades", the IMF found, deepening a fall of more than 40% by the end of March 2026.

Is bitcoin "digital gold"? What the evidence says

The digital gold idea rests on scarcity. Bitcoin's code caps its supply at 21 million coins, so, the argument goes, it should hold its value when central banks create money and prices rise. It's a coherent story. The data are less tidy.

Using weekly data from 2010 to 2020, one study found that bitcoin "appreciates against inflation (or inflation expectation) shocks", but that, unlike gold, it falls when financial uncertainty rises. A 2025 study covering 2010 to early 2023 also found a hedge, but only for surprises in the consumer price index (CPI), and mainly in bitcoin's "early days". From the COVID-19 outbreak onwards, the effect "disappeared", while gold's grew stronger.

The biggest real-world test pointed the same way. In June 2022, US consumer prices were 9.1% higher than a year before, the largest rise since 1981. Yet bitcoin and ether lost around three-quarters of their value that year as central banks raised rates to fight inflation. In early 2026, the IMF found that gold, oil and emerging-market stocks all beat bitcoin on a risk-adjusted basis.

The dollar's central role

Most crypto is priced in US dollars, and most of crypto's cash is dollars in token form. According to the BIS, 99.4% of fiat-backed stablecoins (those backed by government-issued money) are pegged to the US dollar, measured by market value.

The dollar's strength matters beyond pricing. BIS research calls it "a barometer of global investor risk appetite, over and above other gauges such as the VIX", an index of expected stock market swings. When investors retreat from risk, the dollar tends to rise and financial conditions tighten around the world.

There is simple arithmetic, too, for anyone outside the US. If you hold a coin priced in dollars, your return in euros, yen or won includes the move in the exchange rate. A coin can be flat in dollars and still gain or lose value in your own currency.

How crypto's link to stocks has shifted

Correlation measures how closely two prices move together, on a scale from −1 (opposite) through 0 (unrelated) to +1 (in lockstep). Crypto was once promoted as a diversifier because it seemed unrelated to stock indexes such as the S&P 500, which tracks 500 large US companies. That changed with the macro backdrop:

The IMF's 2022 study also found that bitcoin's correlation with emerging-market stocks rose 17-fold, to 0.34, and concluded that bitcoin "has been acting as a risky asset". A 2023 IMF paper found that the rise coincided with the arrival of institutional investors. In 2026, the IMF's Crypto Assets Monitor found that shocks from the S&P 500 spill over into bitcoin more than the other way around.

The link isn't fixed, though. After the stablecoin TerraUSD and the exchange FTX collapsed in 2022, the BIS found "little discernible impact on broader financial conditions outside the crypto universe". Stocks can drag crypto down without crypto dragging stocks down with it.

Stablecoins: crypto's link to US Treasury bills

To keep their tokens redeemable at one dollar, stablecoin issuers hold reserves, much of them in Treasury bills (T-bills), which mature within a year. As of March 2026, T-bills made up about 61% of the reserves behind Tether's USDT, and overnight Treasury repurchase agreements (short loans backed by Treasuries) about 53% of those behind Circle's USDC, the IMF reports.

US law points the same way. The GENIUS Act, signed in July 2025, requires payment stablecoins to be backed at least one-for-one by assets such as cash, bank deposits, Treasury bills with 93 days or less to maturity, and overnight repos. It also bars issuers from paying holders interest just for holding the coin, so the income on the reserves goes to the issuer.

That makes stablecoins noticeable, if still modest, buyers of short-term US debt. Their T-bill holdings have roughly doubled since the end of 2023, the IMF finds, though money market funds hold far more, at 41% of all T-bills. A BIS working paper estimates that a $3.5 billion inflow into stablecoins lowers three-month T-bill yields by up to about 4 basis points (0.04 percentage points) within ten days, and by more when Treasury markets are under stress.

What to watch, and how to read it

You don't need to predict anything to follow the macro picture. Markets tend to react to surprises: the gap between a number and what was expected, and what that gap implies for the next rate decision.

Start with the central banks. The FOMC's remaining 2026 meetings are on 27–28 October and 8–9 December, the latter with new economic projections. In Europe, the European Central Bank (ECB) raised its deposit rate to 2.50% from 16 September 2026, its second increase this year.

Then inflation. US consumer prices rose 3.4% in the 12 months to August 2026, according to the Bureau of Labor Statistics (BLS), and September's figures are due on 14 October. The Fed measures its 2% goal with a different gauge, the personal consumption expenditures (PCE) price index from the Bureau of Economic Analysis (BEA).

None of this tells you what crypto will do next; it tells you what kind of environment it is trading in. For the mechanics of placing trades, see our guide to orders, spreads and slippage.