Key takeaways:

Institutional investor demand and corporate adoption may push Bitcoin higher despite recession fears.

Investors’ belief that the US Federal Reserve will hold rates favors Bitcoin price upside.

Stock markets around the world responded positively to the temporary suspension of import tariffs between the United States and the European Union, with the S&P 500 rising 1.5% on May 27. However, concerns over a global economic recession persist, capping Bitcoin’s (BTC) upside, especially since the baseline US import rates have been raised for most regions.

Bitcoin remains antifragile and poised to outperform in uncertain times

Given the growing investor uncertainty about economic conditions, Bitcoin hovering around the $110,000 level has taken investors by surprise as it consolidates the top-6 position as a global tradable asset by market capitalization. Investors now ask whether Bitcoin is becoming antifragile or if a drop below $100,000 is inevitable in a recessionary environment.

Traders currently estimate a 41% chance that the US Federal Reserve (Fed) will maintain interest rates through September, a steep rise from just 2% one month ago. 

CME FEDWatch target rate probabilities. Source: CME

Normally, a higher cost for capital is bearish for risk-on assets like Bitcoin. However, in this context, it also suggests potential liquidity injections from the Fed, given the unfavorable US fiscal outlook, where government spending exceeds revenue capacity.

US President Donald Trump has called for lower interest rates, but Fed Chair Jerome Powell remains cautious due to a strong labor market and rising inflation pressures, whether driven by tariffs or easy credit conditions. This tension helps explain why the S&P 500 has struggled to retake its February all-time high of 6,147 and why Bitcoin’s upside has also been limited.

Bitcoin’s current market capitalization of $2.2 trillion now exceeds that of Google and Meta, which partially explains the $112,000 resistance level. Still, it would be inaccurate to suggest Bitcoin has decoupled from traditional markets; its 30-day correlation with the S&P 500 has remained above 70% over the past four weeks. As such, if equities enter a bear market, Bitcoin is likely to face downside as well.

30-day correlation: Bitcoin/USD vs. S&P 500 futures. Source: TradingView / Cointelegraph

Companies are currently reporting earnings for the first quarter, a period that predates the escalation of the trade war. As a result, the stock market may take longer to reflect the full negative impact, even as macroeconomic indicators show signs of contraction. The 6.3% drop in US durable goods orders in April, reported on May 27, could be the first signal of a weakening economy.

US durable goods–new orders for April. Source: US Census Bureau

However, even if corporate earnings for the first quarter fall short of expectations, this does not automatically mean the S&P 500 will suffer significantly. In fact, disappointing results could open the door for faster interest rate cuts, which tend to benefit companies by lowering financing costs and potentially stimulating consumer demand.

Bitcoin’s appeal as a strategic asset grows, Trump Media joins the party

Bitcoin’s risk profile appears to have improved after Trump Media and Technology Group announced plans to acquire BTC following a $2.5 billion mix of debt and equity financing. “We view Bitcoin as an apex instrument of financial freedom,” Trump Media CEO Devin Nunes said, according to Reuters. This development suggests that Bitcoin’s trajectory toward $112,000 is not solely tied to broader economic growth.

Related: Bitcoin stalls at $110K but institutional investors continue gobbling up BTC

The growing institutional and corporate interest in Bitcoin adds a new dimension to its market behavior. While macroeconomic trends and correlations with traditional assets still matter, Bitcoin is increasingly being framed as a strategic asset with utility beyond speculation. As such, its performance could diverge, at least partially, from that of equities, especially as adoption broadens among influential companies and investors.

While the stock market may remain sensitive to macro data and earnings surprises, Bitcoin’s upside potential appears to rest on a mix of monetary policy, institutional positioning, and its emerging role as a hedge against systemic financial risk.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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Filed under: Bitcoin - @ May 27, 2025 7:20 pm