Bitcoin Recovery Fueled by Weaker Dollar and Steeper Yield Curve, Analysts Predict

Bitcoin starts 2026 showing signs of recovery after a difficult end to 2025. Analysts from Bitfinex indicate that improvements in liquidity, along with a weaker dollar and a steepening yield curve, may drive institutional interest back into the crypto market. With corporate adoption rising and pivotal ETF flow data coming soon, the outlook for Bitcoin remains cautiously optimistic.

Key Takeaways

Bitcoin stabilized between $85,000 and $94,000, gaining over 3% in early 2026 trading.
The decline in Bitcoin by 6.44% in 2025 was influenced by low liquidity and tax-loss selling.
The steepening yield curve and a weaker dollar are shaping a new macro environment.
Corporate entities, such as Strategy Inc. and BitMine Immersion Technologies, are increasing their Bitcoin and Ethereum holdings.
Legislative changes in Turkmenistan indicate growing sovereign interest in cryptocurrency.

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

Bitcoin Shows Signs of Recovery

Bitcoin has kicked off 2026 with indications of stabilization, recovering from a challenging close to 2025. The cryptocurrency has consolidated its price between $85,000 and $94,000, yielding a gain of over 3% in the initial trading days as stock markets softened.

Bitfinex analysts note that this recovery follows a year-end characterized by low liquidity and tax-loss harvesting, which had led Bitcoin (BTC) to drop 6.44% in 2025, despite the S&P 500 finishing near record highs with a substantial annual increase of 16.33%.

Bitcoin Recovery - Bitcoin Price Chart

Additionally, the rate of selling driven by ETFs has notably decreased as the year ended, indicating that much of the previous risk has likely been accounted for in current prices.

As we move into early 2026, analysts anticipate that improved liquidity conditions will play a crucial role, particularly in response to upcoming ETF flow data, which could signal whether institutional capital will return to the digital assets space or if caution will persist.

Economic Factors Influencing Bitcoin

Macro Environment Transitions

According to Bitfinex analysts, two key trends are influencing the macroeconomic landscape in the United States:

Steepening yield curve
Weaker dollar

The Treasury yield curve has notably moved away from its inverted state, a condition existing from 2022 to 2024, as expectations for policy easing strengthen.

At the same time, long-term yields remain high due to inflation concerns, heavy governmental borrowing, and fiscal issues.

Bitcoin Recovery - US Treasury Yield Curve Chart

Currently, the disparity between two-year and 30-year Treasuries is around 140 basis points, while the two-to-ten-year curve shows about 70 basis points.

Analysts interpret this situation as a recalibration of duration and credibility risks, not a resurgence of growth optimism, keeping financial conditions tighter than what rate cuts alone would suggest.

Furthermore, the US dollar has weakened significantly, dropping approximately 9% since January 2025, despite some recovery toward the year’s end.

Bitcoin Recovery - US Dollar Index Chart

This decline represents analysts' views on US policies aimed at enhancing trade competitiveness and a gradual reassessment of US policy credibility following various tariff decisions and withdrawals from multilateral agreements earlier in the year.

Despite these immediate currency dynamics, the fundamental stability of the dollar remains, supported by robust capital markets and ongoing demand for Treasuries.

The overall risk suggests a managed depreciation for the dollar rather than a full-scale reversal, creating conditions in which high long-end yields combined with a softer dollar favor assets that offer near-term cash flow and defensive qualities.

Growing Corporate and Sovereign Interest in Crypto

Corporate accumulation of cryptocurrencies has remained a significant trend into year-end 2025. For instance, Strategy Inc. has continued to build its Bitcoin holdings, now totaling 673,783 BTC after a recent purchase.

Additionally, BitMine Immersion Technologies has increased its Ethereum holdings to approximately 4.14 million ETH, while also diversifying into staking and validator infrastructure.

Analysts have observed that the transition from basic accumulation to yield-generating strategies is a notable shift. BitMine has already staked roughly 408,627 ETH and plans to establish a proprietary validator network early in Q1 2026.

Chairman Thomas Lee referred to BitMine as “a leading source of incremental demand for ETH,” especially as the company added over 32,977 ETH in just the past week, taking advantage of favorable conditions created by the year-end tax dynamics for long-term investors.

Furthermore, on a national scale, analysts highlighted Turkmenistan’s recent introduction of regulations allowing domestic crypto mining and trading under central bank oversight, showcasing a significant policy change for one of the world’s more closed economies. Nonetheless, the law does not recognize cryptocurrencies as legal tender and keeps strict controls over internet access.

Looking Ahead: Assessing Liquidity and Market Sentiment

“Even though Bitcoin consolidated within a narrow range to end 2025, likely pressured by tax-loss harvesting and portfolio adjustments, the start of the new year shows signs of positivity,” noted Bitfinex analysts in an interview with Cryptonews.

“With the US Treasury curve moving out of its previous inversion, it reflects a macro landscape where liquidity selectively improves.”

The interplay between high long-end yields and a softer dollar creates an environment that favors assets with positive cash flows, pricing power, and defensive attributes, potentially benefiting Bitcoin significantly.

As we enter early 2026, upcoming ETF flow data will be pivotal in confirming whether there is renewed institutional interest in the market or if caution still reigns among investors, analysts concluded.