Alex Carchidi, The Motley Fool
4 min read
In This Article:
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Macroeconomic factors have big implications for Bitcoin and XRP.
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Five such factors are currently becoming tailwinds for these two coins.
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Most of these trends will take a couple of years to play out in full.
Water seeks its own level, and so does money. When cash becomes plentiful in the financial system, scarce digital assets such as Bitcoin (CRYPTO: BTC) and XRP (CRYPTO: XRP) often move sharply higher.
Looking toward 2026, there are five macroeconomic forces that appear ready to remove several roadblocks that have held crypto back during the past two years. XRP and Bitcoin are likely to go higher as a result. Here's why each matters.
Think of liquidity as the total pool of spendable cash in the global economy. When central banks add money to their respective national financial systems, usually by enlarging their balance sheets, investors have more capital to deploy, and riskier assets like major cryptocurrencies benefit first.
And since mid-2024, the total combined assets of the U.S. Federal Reserve, the European Central Bank, and the Bank of Japan have ticked higher for multiple quarters in a row.
During the last comparable upswing, from March 2020 to April 2021, Bitcoin leapt 500%, while XRP surged 483%.
So if major central banks keep refilling the punch bowl, history suggests another party for crypto prices, assuming nothing spoils the fun.
Interest rates set the cost of borrowing money from central banks. Lower borrowing costs make cash cheaper and thus push investors to seek higher-return alternatives to government bonds, including leading digital assets like Bitcoin and XRP.
The Fed is now widely anticipated to trim its benchmark interest rate by mid-2026, which implies at least a couple of interest rate cuts in the very near future. In 2019, when the Fed cut rates by almost 1 percentage point, Bitcoin rose 120% in five months, and XRP climbed 17%.
That exact performance probably won't be replicated this time around, assuming things proceed as expected. But it will still likely be bullish for these coins.
The U.S. Dollar Index is down roughly 8% so far in 2025 as worries over trade tensions and federal deficits mount.
A weaker dollar means that global investors need fewer units of their local currency to buy dollar-denominated Bitcoin or XRP, which could have the effect of juicing demand.
In 2017, a similar dollar slide that lasted through the start of 2018 preceded a jump in Bitcoin's market cap by a multiple of 13.5, and pushed XRP to rise by a shocking multiple of 34.6. As long as tariffs remain a topic of conversation for the U.S. economy, there could be a tailwind in play here.
