Bitcoin’s Edge Lies in Liquidity, Not Inflation

Authored by Dovile Silenskyte, Director of Digital Assets Research at WisdomTree, the analysis reframes bitcoin’s performance through the lens of macro regimes rather than headline inflation.

• Bitcoin responds primarily to real interest rates, liquidity conditions, and confidence in monetary institutions, not short-term CPI fluctuations.

• The asset has historically struggled during aggressive monetary tightening but performs best when real rates peak and policy expectations shift toward easing.

• Its strongest long-term tailwinds emerge when monetary credibility weakens or liquidity is expected to return, making it a convex, forward-looking exposure.

How should investors position bitcoin within a strategic allocation framework built around macro regimes? The full paper explores where its role is most coherent—and where it is often misunderstood.