On July 1, 2026, the World Gold Council once again defined gold as the "barometer of the global macroeconomic environment" in its "2026 Mid-Year Outlook for the Global Gold Market," giving a baseline scenario of trading around $4,100 per ounce for the year — this means that after experiencing extreme market conditions, gold is expected to return to a more moderate range. At the same time, the battle around the path of interest rates was made public in Washington: while the market broadly bet on the Federal Reserve raising rates at least once this year, likely in October, and that the Bank of England, the Bank of Japan, and the European Central Bank would also tighten monetary policy, the National Economic Council Director Hassett openly stated that "raising rates would be a mistake." This anti-rate hike voice from within the administration added new uncertainties to the already tense interest rate expectations. Returning to the price itself, over the past twelve months, gold has been viewed as one of the best-performing assets: in late January 2026, the price of gold exceeded historical peak values more than 12 times in a short period, with London spot gold at one point reaching about $5,405 per ounce, and in the first half, it even surpassed $5,500 per ounce, but then quickly corrected, falling below $4,000 per ounce by June, with a cumulative decline of about 7% for the year. This process of "from exuberance to repricing" is essentially the market rewriting the narrative around inflation, geopolitical risks, and the interest rate environment. When gold, the traditional safe-haven anchor, began to shake violently and the future direction of interest rates showed a divergence between the Federal Reserve and the White House, the question of where funds would stand between risk-free rates, physical hedging, and highly volatile on-chain assets was brought back to the forefront: moving forward, the differentiation between interest rate paths and hedging demand will force BTC, ETH, and other risk assets to be redefined by the market as either "hedging tools" or purely speculative risk instruments.
From Soaring to Plummeting: The Hedging Signal from the Gold Barometer
Over the past twelve months, gold has nearly been considered one of the "best-performing" assets. In late January 2026, this reverence peaked: London spot gold hit historical peaks more than 12 times in a short period, once reaching about $5,405 per ounce and further breaking through $5,500 per ounce in the first half. It was a typical "period of resonance between fear and inflation" — the confluence of geopolitical and price expectations led global allocators to continually raise the weight of gold in their portfolios, viewing it as the ultimate insurance against all uncertainties.
However, this trend began to reverse noticeably after the Spring Festival. The World Gold Council’s midyear report highlighted the results: by June, gold prices had accumulated a decline of about 7% from their highs, even briefly falling below $4,000 per ounce, with the baseline scenario indicating fluctuations around $4,100 per ounce for the year. This extreme optimism of "only rising and not falling" quickly shifted to a repricing of "high volatility and even downward adjustments." Essentially, global risk-aversion sentiment transitioned from excessive stacking back to realism — as interest rate expectations rose and cash and short-term bonds began to be revalued, gold was no longer the only safe-haven outlet but became an option needing cost and opportunity yield calculations.
For on-chain capital, this gold price curve serves as a contrasting benchmark for the narrative of "digital gold." The consecutive highs in January strengthened the imagery of Bitcoin as a hedge against inflation and geopolitical uncertainties — the more gold surged, the more institutions were willing to include BTC/ETH on the same page in research reports, viewing it as a higher volatility, higher beta alternative hedging factor in their portfolios. But when gold prices turned around in the second quarter and macro sentiment shifted from one-sided safety to a reevaluation of interest rates and growth, some funds began to tighten their exposure to gold and simultaneously reduced their tolerance for "digital gold" stocks, flipping BTC/ETH from "essential hedging tools" back to "risk chips determined by market volatility." This time, gold's transition from soaring to plummeting conveyed not merely panic or comfort, but a clear signal: in a world of dual uncertainties regarding interest rates and geopolitics, both physical gold and on-chain assets will have their roles in asset allocation dynamically rewritten.
Interest Rate Expectations vs. Contrarian Voices from the White House: How the Interest Rate Game Impacts Crypto Valuations
On the same timeline as gold’s drastic drop from extreme highs, interest rate expectations became the true protagonist. According to a single source, the market generally bet that the Federal Reserve would raise rates at least once in 2026, likely around October, with the Bank of England, the Bank of Japan, and the European Central Bank also expected to tighten monetary policy, implying a "default scenario" of synchronous upward movement in global risk-free rates. In contrast, the internal dissent from the White House emerged — National Economic Council Director Hassett publicly stated that "raising rates would be a mistake," and the administration's resistance to rate hikes suddenly added a layer of political uncertainty to the interest rate path, forcing traders to re-evaluate long-term interest rate endpoints between the "tight market consensus" and the "loose White House narrative."
For gold and BTC/ETH, this isn’t just a prediction issue, but rather the underlying parameters of valuation models being pulled back and forth. General experience suggests that once a rate hike occurs or is strongly anticipated, real interest rates and risk-free yields rise, leading non-cash-flow-producing assets like gold and Bitcoin, perceived as "digital gold," to face valuation compression due to rising discount rates. The leverage exposure of highly volatile on-chain assets will also be forced to downgrade under the combination of a stronger dollar and rising financing costs. Conversely, when the market begins to doubt whether central banks can fully pursue this tightening path — especially in the context of the White House’s open anti-rate hike stance — as long as the expectations for rate hikes are delayed and deemed "below fear levels," the downward movement in discount rates can rapidly amplify in technology stocks, growth stocks, and BTC/ETH models, driving risk preferences to warm up, reopening leverage on perpetual contracts, and significantly increasing the willingness of funds to flow back from gold and dollar cash into on-chain high-volatility assets. In the second half of the year, the core variable in the crypto market will no longer be a singular price trend, but rather how the interest rate game alters funds' valuations and courage towards on-chain high-volatility assets.
In the Baseline Scenario for Gold: Funds Swinging Between Precious Metals and On-Chain Assets
The baseline scenario presented by the World Gold Council for gold prices is a "high but moderate" world: after it once reached about $5,405 and briefly went above $5,500, gold is projected to trade around $4,100 per ounce for the year, viewed as a retreat from extreme highs to a more sustainable level. Behind this assumption is that while interest rates may rise, they will not spiral out of control, geopolitical tensions persist but do not escalate into a global crisis, and investor sentiment switches back and forth between panic and greed. In such a script, gold continues to serve as a macro barometer, but it is no longer the only safe haven. In asset managers' allocation meetings, precious metal hedging is now being compared on the same table with other high-beta hedging tools for cost-effectiveness.
As gold hovers around $4,100, high returns are compressed into "defensive points." Some of the funds within the risk-averse category will ask themselves: since precious metals can only provide limited price elasticity, should they introduce more volatile hedging positions in their portfolios? The narrative of Bitcoin as "digital gold" is reactivated here — it cannot replace all gold positions, but can take on part of the upward elasticity role during moments when interest rate expectations soften and the pace of rate hikes is questioned. Meanwhile, gold maintains its strength but increases in volatility, forcing holders of dollar-denominated assets to switch more frequently between the triangle of "cash — gold — on-chain risk assets": when risk-averse sentiment prevails, a combination of dollar cash and precious metals remains the first choice; once the market believes that the rate peak is approaching, dollar-denominated on-chain instruments and over-the-counter dollar deposits will be quickly mobilized as ammunition to buy BTC/ETH. The real change in the baseline scenario is the logic of positioning for risk-averse funds — they are no longer just swinging between precious metals and the dollar but are gradually incorporating BTC/ETH into the same hedging lineage and reallocating positions at different macro nodes.
With Multiple Central Banks Tightening on the Horizon: Global Liquidity Reversal Compresses Crypto Leverage Space
As the market prices in the "continued tightening of monetary policy" by the Federal Reserve, the Bank of England, the Bank of Japan, and the European Central Bank on the same timeline (according to a single source, this is a predictive judgment), what is actually happening is a synchronous rise in global risk-free rates. General macro experience indicates that such a rate hike resonance tends to boost the dollar index, raise the costs of cross-border financing, and layer-by-layer push up the discount rates for global assets, from stocks to gold, and to Bitcoin, which is viewed as "digital gold," all of which must undergo a re-evaluation of valuation pressures. The rise in risk-free yields means that holding short-term bonds or dollar cash can yield more considerable returns, prompting some international funds to choose to return to local currencies or embrace high-yield bonds, actively reducing their exposure to high-volatility assets, categorizing crypto assets as the first to be trimmed from risk budgets.
On-chain, this rate re-pricing directly affects the dollar funding pool and leverage structures. In a rate hike cycle, the stronger dollar and higher financing costs slow the growth of newly entered "dollar-pegged on-chain instruments," while off-exchange dollar liquidity tends to stay in banks and treasury bonds, rather than being allocated to perpetual contract margins and lending agreements. High-leverage contracts and on-chain lending are extremely sensitive to funding costs and volatility; general experience shows that during periods of tightening liquidity and significant price fluctuations, concentrated liquidations and deleveraging often occur, forcing contract positions to be quickly closed in the direction of market movement, amplifying the downward or upward swings of BTC/ETH. In this environment, the risk preference in the crypto market begins to stratify: on one end are patient funds who treat BTC/ETH as a long-term "macro hedging tool" willing to endure short-term volatility for mid- to long-term institutional hedging; on the other end are short-term funds who have been forced out of the leverage game by the rate hike cycle, with limited ammunition remaining for high-frequency speculation. The overall result is amplified volatility and compressed leverage space, where the positions that can remain must prove their existence value under stricter global liquidity constraints.
Second Half Trading Gameplan: Bet on Rate Divergence and Hedging Rotation
Standing at the point of July 1, the World Gold Council just presented a "holding around $4,100" baseline scenario, while the White House has torn apart the consensus expectations with "raising rates would be a mistake.” The trading paths for BTC/ETH in the second half of the year can generally be outlined as follows: if the Federal Reserve and other central banks eventually continue along the market’s current script of "at least one rate hike, action in October," rising real interest rates stabilize gold in a moderate range, then on-chain high-volatility assets will continue to be viewed as risk exposures to be prioritized for reduction, leading funds to flow back from BTC/ETH to dollar cash and gold, tightening on-chain liquidity and primarily testing volatility downwards; if Hassett-style anti-rate hike voices gradually gain the upper hand, with the interest rate path turning out to be more moderate than expected, the ceiling on risk-free dollar yields reduced, then gold and BTC/ETH will have an opportunity to enjoy "valuation reappraisal" together, with previously squeezed leverage and long positions attempting to seek high beta returns from on-chain assets again; the third, more complex scenario involves repeated inflation and recession expectations, frequent geopolitical shocks, with gold price significantly oscillating around its "macro barometer" role, prompting some institutions to reassess Bitcoin as a digital hedging tool for relative value rotation between gold and on-chain assets — this would increase BTC/ETH's sensitivity to every piece of geopolitical news, interest rate decisions, and economic data. For crypto traders, the key in the second half of the year is not to prematurely bet on a single outcome, but to bind their positioning structure to a few core observational variables: whether the actual decisions of the Federal Reserve and other central banks fulfill the current rate hike expectations, the rhythm of strength and weakness switching between gold relative to dollar cash and on-chain assets, and the market's repricing path between "inflation concerns" and "recession fears." These factors will directly determine whether BTC/ETH is viewed by funds as a hedging tool or as a risk asset that is first to be abandoned amid the next round of regulation and liquidity tightening.
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