Major banks including Barclays and JPMorgan have eliminated forecasts for Federal Reserve rate cuts in 2026, pivoting to expectations of steady rates through year-end. Yet Bitcoin surged past $81,000 on May 5, suggesting the largest cryptocurrency is decoupling from traditional monetary policy headwinds. The move underscores a critical market split: while higher-for-longer interest rates typically crush risk assets, Bitcoin has climbed roughly 35% from its $60,000 lows earlier this year, signaling structural demand independent of central bank trajectory.
Banks Abandon Rate-Cut Forecasts Amid Inflation Persistence
Barclays scrapped its rate-cut outlook on May 4, joining JPMorgan and other major financial institutions in reversing prior guidance that predicted at least two cuts in 2026. The reversal stems from persistently elevated energy prices, driven partly by geopolitical tensions involving Iran and disruptions to global oil flows. Brent crude traded at $113.51 per barrel as of May 5, down 0.8% on the day, while WTI crude fell 2% to $104.26. This inflation persistence has forced banks to extend their higher-rate outlook, a scenario that historically pressures equities, bonds, and other risk assets. The policy shift reflects a recognition that the Fed’s 2026 rate path will remain restrictive, contrary to earlier market expectations of accommodation.
Bitcoin Breaks Resistance as Technical Setup Strengthens
Bitcoin hit $81,024.04 at publication time on May 5, gaining roughly 2% to reach $80,700 and clearing a key resistance level. Ashish Singhal, co-founder of FIU-registered exchange CoinSwitch, identified two critical technical zones: the $81,500 resistance level and a CME futures gap around $84,000. Bitcoin’s 200-day simple moving average sits at $83,430, positioning the asset within a rising channel marked by higher lows and higher highs since the February lows. Traders are watching whether Bitcoin can sustain above $81,500 and eventually fill the $84,000 gap, with upside targets extending toward $100,000. Downside support remains anchored near $70,000. The Crypto Fear and Greed Index stands at 50, a neutral midpoint that masks strong bullish control of price action.
Inflation Hedge Narrative Clashes With Equity Correlation Story
Analysts remain divided on Bitcoin’s drivers. One thesis frames the rally as validation of Bitcoin’s inflation-hedge properties, bolstered by continued inflows into spot Bitcoin ETFs. A competing narrative attributes gains to Bitcoin’s correlation with equities, which have also climbed despite the rate-cut reversal. Alex Kuptsikevich, chief market analyst at FxPro, warns of sentiment fatigue: “The market is approaching a significant turning point. Since last October, there have been only brief surges in sentiment to higher levels, but these have provided excellent opportunities for bears to sell at higher prices.” This skepticism suggests the current rally remains vulnerable to profit-taking, particularly if equity momentum stalls. Alternative assets including Toncoin surged 35% and MORPHO rose 11%, indicating broad-based demand rather than Bitcoin-specific strength.
Next Test: Can Bitcoin Hold $81,500 and Reach $84,000?
Bitcoin’s immediate fate depends on whether bulls can sustain above $81,500 and close the CME futures gap near $84,000. A break above that zone would target $100,000, validating the inflation-hedge thesis. Failure to hold $81,500 invites a retest of $70,000 support and undermines the decoupling narrative. The Fed’s actual policy decisions in coming months will serve as the ultimate test of whether Bitcoin has truly divorced from monetary policy expectations or merely benefited from temporary equity strength.
