Can Bitcoin cope with global economic uncertainty that doubles the level of the 2008 recession and is worse than ever?

The Global Uncertainty Index, a GDP-weighted measure constructed from the frequency of “uncertainty” appearing in the Economist Intelligence Unit’s country reports, reached 106,862.2 in the third quarter of 2025 and remained high at 94,947.1 in the fourth quarter.

The index is not a measure of volatility. It is a text-based barometer of policy, geopolitical, and economic ambiguity that can remain elevated even when stock market prices are calm.

This methodology rescales word frequencies and aggregates them across countries. This means that current readings equate to 10 to 11 mentions of “uncertainty” or “uncertainty” per country in a typical 10,000-word quarterly report, which is clearly high by historical comparison.

What makes the current environment unusual is the disconnect between record uncertainty and the restrained pricing of stress in traditional risk markets.

As of February 11th, the VIX index is 17.66. The MOVE index, which tracks bond market volatility, is at 62.74. The St. Louis Fed’s Financial Stress Index was -0.6558, below its long-term average as of the week ending February 6, indicating that stress is below normal.

While markets are assessing business as usual, national analysts are writing about a murky record.
This disconnect is important for Bitcoin. This is because asset movements differ depending on whether uncertainty remains in the headlines or permeates into the actual financial situation.

Currently, the macroeconomic variables that tend to govern Bitcoin, which is traded as a risk asset, remain restrictive. At the time of writing, the dollar index is trading at 96.762. As of February 9, the 10-year US Treasury yield was 4.22% and the 10-year TIPS real yield was 1.87%.

A weaker dollar and higher real yields often indicate volatile price movements and increased sensitivity to policy expectations, flows, and volatility demands.

The price of Bitcoin fluctuated accordingly. BTC was trading around $66,901.93 at the time of writing, down about 2.5% from the previous closing price.

Demand for downside protection is increasing in the options market, with Deribit’s implied volatility counter DVOL rising from about 55.2 to about 58 in the past 48 hours.

The move shows that traders are paying for hedging, coinciding with rising macroeconomic uncertainty, even if spot volatility has not yet spiked.

Spot Bitcoin ETF flows tell a similar story of regime uncertainty rather than conviction.

As of Feb. 10, January saw net outflows of more than $1.6 billion, while February saw net outflows of nearly $7 million, with most of the flow reversing over the past three business days, according to data from Pharside Investors.

This churn suggests that institutional allocators are de-risking and re-risking in waves rather than maintaining a stable view, a phenomenon common when macro transparency is low but near-term stress pricing remains subdued.

The stablecoin market provides context on whether the liquidity base of cryptocurrencies is intact.

The total supply of stablecoins is approximately $307.5 billion and has remained roughly flat over the past 30 days with a decrease of 0.25%. This number is important because it represents on-chain purchasing power that has not evaporated despite fluctuations in flows and sentiment.

The “dry powder” remains, awaiting the development of a catalyst or regime change.

Two competing interpretations

Bitcoin’s next move will depend on which of two plausible interpretations of record uncertainty prevails.

The first interpretation treats high WUI as a precursor to tight financial conditions. Bitcoin tends to behave like a high-beta risk asset when policy or geopolitical ambiguity ultimately leads to higher risk premiums, weakened growth expectations, or a flight to quality.

In this regime, a strong dollar and rising real yields will put pressure on non-yielding speculative assets, and Bitcoin’s volatility will rise with a downward bias.

The continued outflow of ETFs would confirm that financial institutions are treating BTC as a liquidity sink for exit rather than as a hedge for their portfolios.

The second interpretation treats high uncertainty as a signal of sovereign or policy credibility risk.

Bitcoin could benefit from uncertainty caused by capital controls, fiscal stress, sanctions spillovers, and questions about central bank independence. But historically, that bidding has been most pronounced when real yields have fallen or liquidity conditions have eased, rather than when the dollar has strengthened and nominal yields have risen.

The “nonsovereign hedge” narrative requires macro conditions that make holding cash and government bonds less attractive, but that is not the case today.

What is unusual about the current situation is that the WUI has reached record levels without any easing of financial conditions or a spike in stress indicators. The market is pricing in neither panic nor relief.

The result is a holding pattern in which Bitcoin trades in a range, options markets show caution, and institutional flows fluctuate without a clear trend.

variables that determine the result

Real yields and dollars are the simplest variables to look at.

A reversal in the 10-year TIPS yield, or a decline in the broader dollar index, would signal that macro conditions are moving toward a second regime, where uncertainty becomes a tailwind rather than a headwind for Bitcoin.

Historically, Bitcoin’s strongest rebounds have occurred when real yields have fallen and liquidity has expanded, even if headline uncertainty remains high.

ETF flows are the second tell. If inflows stabilize and remain positive after the drawdown in late January, this would suggest that financial institutions are treating the current uncertainty as an opportunity to add exposure rather than as a signal for further risk aversion.

Conversely, if outflows resume, it would confirm that Bitcoin remains a risk-off sell for traditional allocators.

The options market provides a third signal. If DVOL remains high and the demand for downside hedging continues, it indicates that traders expect volatility to rise, even if spot prices have not yet broken out.

This setup could precede either a sharp decline or a spike in range-clearing volatility, depending on which macro variable shifts first.

The gap between record WUI and suppressed VIX or MOVE is most obvious. If policy and geopolitical uncertainties are ultimately factored into traditional volatility metrics, it will confirm that the current tranquility is breaking and that Bitcoin’s “risk asset” reflex is likely to prevail.

If stress indicators remain low while WUI remains high, this suggests that uncertainty is factored into narratives and forecasts, but not positioning. This setup favors a sharp move in either direction for Bitcoin depending on the next macroeconomic catalyst.

What is clear is that Bitcoin trades within a regime in which two competing identities of assets, high-beta risk assets and non-sovereign hedges, are both plausible but require opposite macroeconomic conditions to activate.

Record uncertainty does not resolve that tension. It amplifies it, and the next move for assets will depend on whether the uncertainty becomes stressful or limited to national reports and analyst forecasts.