It’s easy to get caught up in the daily movements of Bitcoin’s price. But if you zoom out, you will see a straight-forward 100% increase in just 12 months.
But this most recent rally above $120,000 is not just a crypto story. It’s also a macro story.
What we are witnessing from a macro perspective right now, is a perfect cocktail of institutional adoption, favorable policies, and currency dynamics.
The Fed’s pivot, a weaker dollar, and relief in real yields have given fuel to risk assets again.
And there are still many catalysts that could swing Bitcoin’s price aggressively on either side. These are important stress points worth tracking if you want to understand where Bitcoin might go next.
Why ETFs and the Fed matter right now
The cleanest read on Bitcoin demand today comes from spot ETFs demand. After a slow summer, flows turned positive again in late September. Multi-day inflows across several issuers coincided with the latest price leg higher.
Unlike futures volumes or offshore exchange data, ETF flows are transparent, regulated, and increasingly institutional. When Bitcoin sees steady increases in its price, it’s because these inflows validate the moves.
Monetary policy sets the stage. The Federal Reserve cut its policy rate by 25 basis points in September to 4.00–4.25% and softened its language. The shift from restrictive to easing bias marked the end of a long squeeze on liquidity.
And after rising to painful highs in 2023, real yields are also finally easing. The US 10-year TIPS yield is now around 1.77%, down from the summer peaks. The dollar also weakened, falling close to 10% this year, with the DXY index hovering around 98.
Source: Kaiko Research
Together, these factors created the cocktail Bitcoin thrives on. That is cheaper liquidity, a softer dollar, and renewed institutional inflows. The same forces sent gold to record highs above $3,900 an ounce.
Bitcoin is once again trading as the high-beta expression of global liquidity.
Could America return to yield curve control?
What happens if the Fed goes beyond cuts and balance sheet management? One possibility that has been floating around is a return to yield curve control.
During the Second World War, the US Treasury capped short-term bills at 0.375% and long bonds at 2.5% to keep financing costs low. The Fed enforced those caps by buying bonds in unlimited size.
A modern version would look different but the mechanics are possible. The Fed could use its balance sheet to suppress yields at specific maturities and keep real rates pinned even if inflation proves sticky.
For markets, that would be a signal of permanent easy money. For the dollar, it would likely mean more weakness.
For Bitcoin, yield curve control would be more than bullish. It would supercharge the rally. Gold would benefit as well, but Bitcoin, with its thinner supply and stronger convexity, would move further and faster.
The last time real yields were pushed artificially low, in 2020–21, Bitcoin multiplied several times over. If curve caps return, the playbook could rhyme.
But the tell will not come from a press release but from language in FOMC statements. Any potential mentions of “maintaining yields in a desired range” or unusual purchase patterns in the Fed’s System Open Market Account are the most likely indicators.
Is France the euro’s weak link?
The euro has looked strong this year, rising 12% against the dollar. But stress is building in one of Europe’s biggest economies, France.
The country’s TARGET2 balance, which is a measure of intra-eurozone capital flows, has swung deep into deficit. French savers are moving deposits to safer systems in Germany and Luxembourg.
At the same time, foreign ownership of French debt is dangerously high, with more than 50% of long-term government bonds being held abroad.
Source: Reuters
This is a vulnerability. If Germany and Japan, the two largest net creditors in the world, start to repatriate capital to fund their own reindustrialisation, France could face funding stress.
The OAT–Bund spread is the cleanest market gauge to track. If it widens sharply, the ECB will be forced into action.
For Bitcoin, a French fracture would matter in two ways. First, ECB liquidity expansion to stabilise French banks would spill into global markets, adding to the liquidity tide.
Second, investors in Europe looking for hard assets outside the reach of Brussels and Frankfurt would turn to gold and increasingly to Bitcoin.
The safe-haven logic that once benefited Swiss francs and Bunds could extend to digital bearer assets.
However, this is not the euro crisis of 2011. France is too large to be treated like Greece. But that is exactly the problem. France is too big to fail, but also too big to bail.
If the second-largest economy in the eurozone suffers persistent outflows, the ECB will be forced to quantitative easing.
Why capital controls would change everything
Capital controls in developed economies are rare, but not unprecedented. Cyprus imposed them in 2013 during its banking crisis.
In a world where deficits are climbing, populist demands are strong, and external creditors are pulling back, the temptation to trap domestic savings will grow.
France again is the test case. If deposit flight accelerates, politicians will first target foreigners. But history shows the next step is locals.
Restrictions on withdrawals, wires, or asset transfers would turn Bitcoin from an investment into a survival tool. It is the only large-scale, portable, censorship-resistant financial asset households can still access.
Even the rumour of controls can drive pre-emptive flows. French deposits total about €2.6 trillion. If only a quarter of that tries to move in days, it overwhelms the system.
Bitcoin’s market cap is small relative to that number. It does not take much reallocation to move the price sharply higher.
Bitcoin is not only a play on liquidity and rates. It is also a hedge against political risk in advanced economies.
What to watch from here
The base case is clear. ETF inflows, Fed easing, a weaker dollar, and softer real yields explain the rally. Those are the daily levers to track.
But the next leg higher, the one that takes Bitcoin from $120,000 toward much more ambitious levels, will need more.
Yield curve control in the United States, fractures inside the eurozone, and the reintroduction of capital controls are not in the consensus.
They are stress scenarios. Yet they are exactly the scenarios that could turn Bitcoin from a liquidity play into a systemic hedge.
Apart from that, the dollar is one of the most vital indicators. Real yields, ETF flows, the Fed’s Open Market Account and France’s TARGET2 will say more about capital direction than anything else.
And when those indicators light up together, the move in Bitcoin becoems exponential.
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