Crypto, interest rates, inflation and the dollar
Does bitcoin protect against inflation? Do rate hikes sink it? What a decade of data shows, and doesn't.
Bitcoin has not behaved like a reliable inflation hedge: when US inflation peaked at 9.1% in 2022, it fell about two-thirds. It has tended to struggle when interest rates rise fast and the dollar strengthens, as in 2022, but month to month the link is weak and changes over time. These are correlations, not proof of cause.
Rates and inflation since 2016
| Year | Bitcoin | Inflation (Dec, yearly) | 10-year yield (Dec avg) |
|---|---|---|---|
| 2015 | +24% | 0.7% | 2.24% |
| 2016 | +94% | 2.1% | 2.49% |
| 2017 | +1,741% | 2.1% | 2.40% |
| 2018 | −76% | 1.9% | 2.83% |
| 2019 | +98% | 2.3% | 1.86% |
| 2020 | +204% | 1.4% | 0.93% |
| 2021 | +124% | 7.0% | 1.47% |
| 2022 | −66% | 6.5% | 3.62% |
| 2023 | +151% | 3.4% | 4.02% |
| 2024 | +131% | 2.9% | 4.39% |
| 2025 | −9% | 2.7% | 4.14% |
Bitcoin: change from the December monthly average of the previous year (Coin Metrics daily closes). Inflation: December CPI against the December before. Yield: December monthly average.
Is bitcoin an inflation hedge?
The argument is that a fixed supply of 21 million coins should protect value when currencies lose purchasing power. The test came in 2021–2022, when US inflation reached 9.1% in June 2022, the highest in about four decades. Bitcoin fell from about $46,355 at the end of 2021 to about $16,524 at the end of 2022, a −64% drop, while prices in shops rose. Over that episode, at least, bitcoin didn't behave like an inflation hedge. Over longer stretches its price has risen far faster than inflation, but so much else drives it that inflation can't be singled out as the cause.
Interest rates
Higher interest rates make safe assets such as Treasury bills pay more, which raises the bar for assets that pay nothing, like bitcoin and gold, and tends to drain money from speculation. From March 2022 to July 2023 the Federal Reserve raised its policy rate from near zero to a range of 5.25% to 5.50%, the fastest increase in decades. The 10-year Treasury yield climbed from about 1.5% to over 4%, and bitcoin's worst year in the period was 2022.
The link is far from mechanical. Across all months from January 2015 to April 2026, the correlation between bitcoin's monthly return and the monthly change in the 10-year yield was +0.03, essentially none. In calendar 2022–2023, when the Fed was raising rates, it was -0.37: bitcoin tended to fall in months when yields jumped. Relationships like this show up in some periods and vanish in others.
The dollar
Because bitcoin is priced in dollars, a stronger dollar mechanically lowers its price for a given value in other currencies, and a strong dollar has often come with tight money. In 2022 the dollar rose to its highest level in about two decades against major currencies while bitcoin slumped. In the first half of 2025 the reverse happened: the US dollar index fell about 11%, its worst first half since 1973, and bitcoin rose from $93,390 to $107,153 (+15%) by the end of June. Two episodes pointing the same way are suggestive, not proof, and the dollar index isn't the only thing that moved in either year.
A correlation only says two prices tended to move together (near +1), in opposite directions (near −1), or with no steady link (near 0) during a particular period. It doesn't say one causes the other: both can be reacting to something else, such as interest rates or the mood of investors in general, and the relationship can change or flip. A correlation measured over the past says nothing reliable about the future.
For a fuller picture of what moves crypto prices, see why is crypto going down, Bitcoin vs. the S&P 500 and Bitcoin vs. gold.
Frequently asked questions
Do interest rates affect crypto?
Often, but not mechanically. Bitcoin had its worst recent year in 2022, when the Fed raised rates fastest, and in 2022–2023 its monthly returns were negatively correlated (-0.37) with changes in the 10-year yield. Over 2015–2026 as a whole the correlation was close to zero.
Is bitcoin a hedge against inflation?
The evidence is weak. When US inflation peaked at 9.1% in 2022, bitcoin fell about two-thirds. Its long-term rise has many causes besides inflation.
Why does a strong dollar hurt bitcoin?
Bitcoin is priced mostly in dollars, and a strong dollar often comes with tight money and less appetite for risk. The relationship is loose and hasn't held in every period.
Where can I see current interest rates and inflation?
The Federal Reserve publishes its policy rate and Treasury yields (H.15), and the Bureau of Labor Statistics publishes CPI monthly. The figures on this page run to April 2026.
Where to next
Sources
- Coin Metrics free daily network data, PriceUSD (GitHub archive, CC BY-NC 4.0)
- Consumer Price Index for All Urban Consumers, CUUR0000SA0 (US Bureau of Labor Statistics)
- CPI news release for April 2026 (BLS, May 12, 2026)
- Selected interest rates, H.15: 10-year Treasury constant maturity (Federal Reserve)
- 10-year US Treasury yield, monthly, H.15 data packaged by datahub.io (core/bond-yields-us-10y)
- Open market operations: policy rate history (Federal Reserve)
- US dollar suffers worst start to year since 1973 (The Irish Times, June 30, 2025)
Written for beginners and checked against the sources listed. Last reviewed November 5, 2026. This page is educational and is not financial, tax or legal advice. How we write and check pages.