In today’s report, we delve into the implications of these developments on the crypto market, analyze the latest Bitcoin price action, and highlight the technical, macroeconomic, and on-chain factors shaping the current landscape.

Here’s what we’ll cover today:

Let’s dive in!

The macroeconomic landscape continues to evolve in favor of risk assets as we close out May 2025. The dollar's persistent weakness has reached new depths, with the Bloomberg Dollar Spot Index hitting its lowest levels since December 2023. Currently trading around 1,200, the greenback has extended its decline from the early 2025 peaks, falling approximately 8% from its highs.

This weakness indicates that market participants are increasingly anticipating the end of the Federal Reserve's tightening cycle, as softening economic data leads to rising expectations of potential interest rate cuts.

Long-term Treasury yields have climbed to multi-year highs, with 30-year yields approaching levels last seen in 2007. The chart shows a dramatic ascent from the pandemic lows near 1% to current levels approaching 5%.

This rise in long-term rates, combined with elevated debt levels, creates what we call "fiscal dominance“, a scenario where debt service costs force central banks to eventually capitulate and maintain accommodative policies despite inflationary pressures.

Perhaps most telling is the relationship between S&P 500 earnings yields and government bond yields. The bottom panel of the earnings yield chart shows this spread has turned negative for the first time since the financial crisis, with the 10-year Treasury yield now exceeding the S&P 500's earnings yield.

This inversion typically signals either bond yields are too high or equity valuations are stretched. Given current fiscal dynamics, some analysts expect bond yields to eventually decline, which could improve the relative attractiveness of risk assets.

The fundamental tension between rising yields and unsustainable debt dynamics creates the perfect environment for Bitcoin adoption. Central banks face an impossible choice: continue fighting inflation with higher rates and risk sovereign debt crises, or accept higher baseline inflation to keep debt service manageable.

Bitcoin benefits from either outcome, as a hedge against currency debasement or as a safe haven during financial instability.

Now let’s dive into the part you’re really here for: the charts, key levels, trade scenarios and what’s next for Bitcoin. 🔥 

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