Crypto is famous for its wild price swings. One day it’s soaring, the next it’s plummeting.
But with more and more investors (including the big Wall Street types) jumping in, a big question keeps coming up:
Do global macroeconomic (macro) forces actually move crypto prices, or does crypto just do its own thing?
Let’s break it down.
What is “macro”? 🌍
“Macro” is just a fancy way of talking about the big stuff that moves the entire financial world.
When people say “macro” or “global macro factors,” they’re talking about the big picture forces in the global economy:
- Central banks (like the U.S. Federal Reserve) raising or lowering interest rates.
- Investors getting more or less willing to take risks.
- Huge swings in stock or bond markets.
Traditionally, these forces shape what happens to stocks, real estate, gold, and more. But how much do they shape what happens to crypto?
Three Forces That Move Bitcoin 🌪️
Bitcoin prices are driven by three main forces:
- Monetary policy, such as when central banks change interest rates or adjust their balance sheets.
- Risk sentiment in traditional markets, when investors’ appetite for risk changes. Basically, when Wall Street gets scared, crypto gets murdered.
- Crypto-specific factors are elements unique to the crypto world. Examples include on-chain activity, crypto exchange hacks, tweets from Trump, Michael Saylor, or Elon Musk, and whatever fresh hell the crypto gods cook up that week.
Think of these as three different winds that can push bitcoin’s price up or down. Sometimes they blow in the same direction, creating massive price movements. Other times, they oppose each other, creating more stability.
The Fed’s Surprising Power Over Bitcoin 😱
One of the most striking discoveries in recent market analysis is just how much the Federal Reserve impacts BTC.
In 2022, when BTC/USD crashed from around $69,000 to below $20,000, analysis shows that over two-thirds of this decline was due to the Fed raising interest rates.
Put simply: If the Fed hadn’t tightened monetary policy in 2022, bitcoin might have only fallen to around $40,000 instead of below $20,000.
Let that sink in.
We’re talking about the “decentralized” currency that was supposed to free us from traditional finance, and it’s getting absolutely bodied by some folks in suits adjusting percentages in Washington.
This challenges the common belief that bitcoin operates independently of traditional financial systems.
When the Fed raises rates, it becomes more attractive to hold “safe” assets like bonds, causing investors to sell riskier assets, including bitcoin.
Different Time Frames, Different Drivers 🌦️
An interesting pattern emerges when examining bitcoin’s price movements:
- Day-to-day movements: Most of Bitcoin’s daily volatility comes from crypto-specific factors.
- Long-term trends: Traditional macro factors like monetary policy have a much stronger influence.
This is like weather versus climate.
Day-to-day “weather” in crypto markets is mostly driven by crypto-specific news, sentiment, and trading activity. But the longer-term “climate” is significantly influenced by broader economic conditions.
Stablecoins: Crypto’s Safe Haven 🧸
When crypto markets go full apocalypse mode, where do traders run? Not to cash like sensible people. Nope, they pile into stablecoins like USDT and USDC.
Stablecoins (cryptocurrencies pegged to the U.S. dollar) act as a “safe haven” within the crypto market.
During crypto market stress:
- Investors sell volatile assets like bitcoin.
- They move funds into stablecoins rather than exiting crypto entirely.
- This pattern is clearly visible during events like major exchange collapses.
It’s basically the crypto equivalent of hiding under your blanket during a horror movie. You’re still in the haunted house, but at least you feel safer.
Real Examples That’ll Make You Go “Huh” 🤔
COVID-19 Market Crash (March 2020)
On March 12, 2020, bitcoin plummeted 37%, the worst daily sell-off in seven years. It lost 50% of its value within one week from March 7 to March 14!
When COVID hit, bitcoin crashed alongside stocks as investors fled to safety. This was a classic “risk-off” event where both traditional and crypto markets saw massive selloffs.
The 2022 Crypto Winter
The crypto industry lost over $1 trillion in market value during 2022!
While everyone blamed Terra Luna, FTX, and various other crypto disasters, the real villain was hiding in plain sight: This wasn’t just about crypto-specific problems.
The Fed’s aggressive rate hikes to combat inflation were the primary driver of bitcoin’s decline, accounting for about HALF of the 64% drop!
Institutional Adoption Events (2023-Today)
When major institutions like BlackRock entered the bitcoin market, it was widely seen as a significant endorsement of bitcoin’s legitimacy and potential as an asset class.
Bitcoin’s price rose due to reduced perception of risk, as investors saw bitcoin as safer with institutional involvement.
Rumors and anticipation around a spot bitcoin ETF intensified in June 2023 when BlackRock filed its application, widely seen as a pivotal industry moment. BlackRock’s move boosted confidence that approval was near, driving speculation and price gains.
At the time of the filing, bitcoin traded around $25,000–$26,000. As ETF approval grew likelier, bitcoin climbed, reaching nearly $46,000 by the SEC’s official approval on January 10, 2024. The rally continued after launch, with bitcoin topping $73,000 by March 2024.
Ongoing institutional interest, particularly from BlackRock and Fidelity, pushed bitcoin past $100,000 for the first time in December 2024, reaching $104,010 by May 2025. After brief corrections, renewed BlackRock purchases lifted the price to $112,000!
As you can see, the entry of major institutions brought significant capital into the market, which contributed to further price increases.
Investors started to think, “Well, if the boring finance guys are in, maybe it’s less likely to go to zero.”
What does it mean for crypto traders? 🤔
Pay attention to the big picture. Big changes in interest rates or huge market panics will impact crypto, sometimes in a big way.
But don’t ignore crypto’s own news. Most of the day-to-day rollercoaster rides are because of things happening within crypto itself.
Watch stablecoin flows. If money is rushing into stablecoins, it’s a sign that crypto investors are getting nervous.
Crypto still has a mind of its own. Despite being more connected to the world’s financial system, crypto prices often do their own thing and can move differently than stocks or bonds.
“Crypto is Macro” 📝
While the crypto market has its own unique dynamics, it’s not immune to global economic forces.
The phrase “crypto is macro” means that the prices in the crypto market are increasingly driven by macroeconomic factors, the same broad, global economic forces that affect traditional financial markets.
Bitcoin behaves somewhat like a high-risk tech stock, sensitive to interest rates and broader market sentiment, but with additional crypto-specific volatility layered on top.
When the Fed is raising rates aggressively, history suggests it might not be the best time to load up on bitcoin. But when monetary policy is loose and risk appetite is high, crypto assets have historically performed well.
Understanding these “macro” relationships is important if you’re a crypto trader/investor.
As crypto gets more mainstream, it becomes more integrated with traditional finance (“TradFi”). This means that “macro” (the big picture economic environment) increasingly does drive crypto prices, especially over longer time periods.
Ignoring these macro factors when investing in crypto could be a costly mistake.
Don’t ignore macro factors when investing in crypto. The Fed might not control Bitcoin’s blockchain, but it sure as hell influences whether people want to buy it.