The post Does a weaker dollar drive Bitcoin price now? appeared com. Bitcoin breached $116,000 for the first time in two weeks, and the usual narrative surfaced: inflation hedge. But the data tells a different story. This cycle, Bitcoin trades less like a consumer-price shield and more like a real-time barometer of dollar liquidity and discount rates. The question isn’t whether Bitcoin hedges inflation, but whether a weaker dollar and falling real yields drive it now. BTC ≠ CPI hedge anymore? The inflation-hedge thesis isn’t wrong, just mistimed. Data suggests that Bitcoin rallied amid liquidity shifts and monetary pivots, not because the Bureau of Labor Statistics printed 3. 1% instead of 3%. CPI measures price levels with a lag. Bitcoin trades forward-looking liquidity and discount rates in real time. Across this cycle, the relationship between Bitcoin and headline inflation weakened while correlations with the dollar index and real yields tightened. A snapshot of directional relationships reveals the shift: Pair Typical Sign Stability What It Reflects BTC × CPI (m/m or y/y) Near zero, unstable Weak, flips frequently Prints are lagged; policy reaction moves BTC, not the CPI print itself BTC × DXY (log returns) Inverse Strengthens in dollar downtrends Global dollar liquidity channel and cross-border risk appetite BTC × 10y real yield (DFII10, Δ) Inverse Time-varying by regime Higher real rates tighten conditions; lower real rates ease financial plumbing Current 30-day Pearson correlations show Bitcoin/DXY at approximately -0. 45 and Bitcoin/DFII10 near -0. 38, while Bitcoin/CPI hovers around zero with frequent sign changes. The 90-day window smooths noise but confirms the pattern: Bitcoin responds to the Fed’s reaction function and dollar liquidity conditions, not the inflation print itself. Why USD strength and real yields transmit into BTC Real yields represent the market’s price of money after inflation. When the 10-year Treasury Inflation-Protected Securities yield rises, the dollar typically firms, global financial conditions tighten, and long-duration.