Weaker Dollar and Steeper Curve Could Fuel Bitcoin Recovery, Analysts Say

Market Overview - Bitcoin has shown early signs of stabilization in 2026, consolidating between $85,000 and $94,000, with a gain of over 3% in initial trading sessions as equities softened [1] - The cryptocurrency experienced a decline of 6.44% in 2025, while the S&P 500 achieved a 16.33% annual gain, indicating a divergence in performance [1] Liquidity and ETF Impact - Analysts expect liquidity conditions to improve in early 2026, making upcoming ETF flow data critical for assessing the return of institutional capital to digital assets [2] Macro Economic Conditions - The US Treasury yield curve has shifted from an inverted state to a steeper configuration, influenced by expectations of policy easing and elevated long-dated yields due to inflation uncertainty and fiscal concerns [3] - The spread between two-year and 30-year Treasuries has widened to approximately 140 basis points, while the two-to-ten-year curve has reached around 70 basis points [3] Currency Dynamics - The US dollar has weakened by roughly 9% year-to-date from January 2025 levels, reflecting policy preferences for improved trade competitiveness and a reassessment of US policy credibility [4] - Despite the dollar's depreciation, its structural foundations remain intact, supported by deep capital markets and sustained demand for Treasuries [5] Corporate Crypto Adoption - Corporate treasury-led accumulation of Bitcoin has been a dominant theme, with Strategy Inc. increasing its holdings to 673,783 BTC through an early-January purchase [6]