The macro backdrop added another layer of uncertainty. The nomination of Kevin Warsh to the Federal Reserve Board was interpreted by markets as a potential shift toward a more restrictive monetary policy stance. Warsh is widely regarded as a policy hawk, and his appointment was seen as reinforcing expectations of tighter financial conditions — a development that typically weighs on risk-sensitive assets, including bitcoin and broader crypto markets.
At the same time, the market’s interpretation of future rate policy has been nuanced rather than uniformly bearish. Following the nomination, rate expectations shifted to imply a greater probability of short-term easing, while long-term expectations moved in the opposite direction. This divergence suggests that investors anticipate some near-term policy flexibility but a more structurally disciplined approach to inflation and monetary stability over the longer horizon.
From a valuation perspective, on-chain indicators now point to historically depressed levels. The two-year rolling Market-Value-to-Realized-Value (MVRV) z-score has declined to the lowest reading on record. This metric, which compares bitcoin’s market capitalization to the aggregate value of coins at their last transacted price, has historically identified periods of significant undervaluation when readings fall to extreme lows.
Bitcoin Market-Value-to-Realized-Value (MVRV) z-score has declined to the lowest reading on record, Source: Bitwise
The Bitwise Cryptoasset Sentiment Index has flashed a contrarian buying signal with sentiment readings being as bearish as during the 10/10 liquidation crash. Is now a good time to buy Bitcoin? This indicator says yes.
Looking beyond crypto-specific indicators, developments in traditional macro signals suggest a potentially improving economic backdrop. The recent strength in precious metals prices has historically coincided with phases of global reflation and increased economic activity. In prior cycles, upturns in the ISM Manufacturing Index have tended to align with periods of stronger performance in bitcoin and other digital assets.
Current consensus forecasts for the ISM Manufacturing Index remain subdued, with expectations centered below the 50 threshold that separates contraction from expansion. However, several regional purchasing manager surveys are indicating readings closer to, or above, that level, which could point to a more resilient manufacturing outlook than is currently priced into markets.
From a technical market structure perspective, the recent price decline has created one of the larger CME bitcoin futures gaps in recent history. Historically, a high proportion of such gaps have been closed within subsequent trading sessions, suggesting the potential for a near-term price retracement toward higher levels.
Taken together, valuation metrics, sentiment indicators, and select macro signals suggest that bitcoin and the broader cryptoasset market may be entering a phase characterized by an asymmetric risk-reward profile. While near-term volatility remains elevated, current conditions differ meaningfully from historical averages and may warrant closer attention from investors focused on longer-term positioning
