- Bitcoin is holding up better than other risky assets.
- It’s also outperforming them when markets are bullish.
- It’s the best of both worlds, says one analyst.
Bitcoin surged past $94,000 on Wednesday, signalling what some analysts say is a shift in how investors value the asset.
The sudden rally puts the top crypto back to where it traded at the beginning of the year after tumbling to $76,000 at the start of April.
“In all my time covering crypto, this is the best price action I have seen on Bitcoin,” Gautam Chhugani, an analyst at brokerage firm Bernstein, said in a note to clients. “[It’s] hard to not have crypto exposure in times like these.”
The recent move comes in stark contrast to how Bitcoin has performed relative to other assets so far this year.
Investors tend to view Bitcoin as a risky asset that thrives during financial boom times. But lately, it has outperformed other risk-on assets like technology stocks when markets are rocky, yet has closely tracked equity rallies when investors are more bullish.
In other words, wrote Chhugani: “Relative resilience during Nasdaq decline. And then participates with higher beta upon Nasdaq relief — best of both worlds!”
Luke Nolan, a senior research associate at CoinShares, echoed that view.
“Perception as to what Bitcoin is could be shifting,” Nolan told DL News.
Investors may now be valuing Bitcoin more as a non-sovereign store of value, as well as some form of hedge towards geopolitical uncertainty, policy error, and monetary debasement, he said.
US President Donald Trump’s seesawing tariff policies have riddled financial markets with uncertainty.
The situation has weakened the dollar, leading investors to look for alternatives to the world’s top reserve currency.
Hedge or risk asset?
It’s not clear if the current trend will continue, though.
Many analysts have warned of the potential inflationary impact of Trump’s trade war.
Bitcoin believers have long touted the top crypto as a hedge against inflation and monetary debasement — like gold — only for it to flounder during times of economic stress.
When US inflation soared to 9.1% in June 2022, Bitcoin plummeted.
But for now, investors are enjoying the best of both worlds, Chhugani said.
“We think Bitcoin is part gold and part risk asset, since it is still a young asset versus gold,” he told DL News.
There are also signs that Trump is letting up on his hard-line tariff stance. After placing levies of up to 145% on China earlier this month, the president said on Tuesday that the high tariffs will “come down substantially.”
That news could also be contributing to Bitcoin’s rise. The S&P 500 stock index rose 2.5% after Trump’s remarks.
However, a continuation of the decoupling between stocks and Bitcoin could help investors anticipate the top crypto’s trajectory, Nolan said.
“This will certainly catch the attention of money managers and news outlets, which could then be a self fulfilling prophecy and drive further outperformance amidst a shaky equity market,” he said.
Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at [email protected].
