The fact that the cryptocurrency trades like stocks and other assets that are viewed as hazardous rather than as a store of value like gold has long irritated bitcoin believers. Some now believe they are seeing early indications of a change.
As a decentralized, nonsovereign asset with a fixed supply, they contend that bitcoin (BTCUSD) ought to trade more like gold and be able to maintain its value even in the face of sharp market volatility. It hasn’t done so for years, though, frequently following the same path as US stocks.
In a phone interview with MarketWatch, Eric Rose, head of digital-asset execution at StoneX, pointed out that Bitcoin has demonstrated relative strength in recent weeks compared to the dollar and U.S. stocks, which both fell as the uncertainty surrounding President Donald Trump’s trade policies shook global financial markets.
Even though U.S. Treasurys, which are considered to be a classic safe haven during times of unrest, saw a steep selloff earlier this month before rebounding later, Bitcoin remained strong.
“I would describe the trading behavior of bitcoin versus every other asset over the last two weeks as strange, but not in a bad way,” Rose stated. It’s not normal for stocks and the dollar to decline simultaneously in the past, and it’s also not common for bitcoin to increase when stocks see a significant decline, he said.
However, according to Mark Hackett, chief market strategist at Nationwide Financial, it doesn’t mean bitcoin will soon join the ranks of conventional safe-haven investments.
“I’m not yet willing to say that bitcoin has become a store of value or a defensive holding, but gold clearly is,” Hackett stated. “What we’ve learned over the last couple of years is that bitcoin is much more risk-on than risk-off, until very recently.”
According to Hackett, MicroStrategy Inc.’s (MSTR) acquisitions of Bitcoin could be among the peculiar, unsustainable factors contributing to the cryptocurrency’s recent surge. According to a recent regulatory filing, MicroStrategy, a software company that is now more commonly viewed as a leveraged bitcoin proxy, purchased an additional 6,556 bitcoins for $555.8 million between April 14 and April 20.
Although the trend is worth watching, Hackett stated that it is “a little too early” for bitcoin bulls to assert that the cryptocurrency has turned into a store of value.
“Bitcoin must have a much longer and sustained period of performance that is not correlated, or moving hand in hand, with other risky assets before skeptics will eventually see it as an alternative to gold,” Rose of StoneX stated.
According to FactSet data, bitcoin increased 7.1% during the previous month, while the Dow Jones Industrial Average DJIA decreased 6%. A gauge of the strength of the dollar relative to a basket of its competitors, the ICE U.S. Dollar Index DXY, dropped 4.7% over the same time frame.
However, with gold futures up 11% in the last month, bitcoin has been lagging behind the precious metal. While bitcoin was still 14.5% behind its record high of $109,225, which was reached on January 20, continuous gold futures (GC00) struck a new record high on Tuesday and briefly traded above $3,500 for the first time.
Fueling the Bitcoin upswing
“I think it’s possible that bitcoin has reached some level of institutional adoption where people don’t necessarily view it as high-beta tech stock anymore, but are starting to view it on its own value,” Rose stated. equities with higher volatility than the market as a whole are referred to be high-beta equities.
More financial institutions were able to participate in bitcoin last year thanks to the introduction of bitcoin exchange-traded funds, and institutional adoption may have also been aided by a more lenient regulatory framework.
Investors may be considering bitcoin as a possible hiding spot during market instability, Rose said, as the uncertainties surrounding Trump’s trade policy seemed to potentially damage the dollar’s reputation as a trustworthy “safe haven” and its position as the de facto global reserve currency.
“I think people are going to look for a global asset that is not denominated in anybody’s currency and stands on its own,” Rose said.
According to Joe McCann, founder and chief investment officer of the cryptocurrency investing firm Asymmetric, there are still a variety of stories influencing the price of bitcoin.
Since bitcoin doesn’t have earnings or cash flows like businesses do, McCann stated that while he believes it might profit from increased liquidity, a recession is unlikely to affect it.
Therefore, regardless of how the global economy is doing, bitcoin might rise if the Federal Reserve and other central banks further reduce their interest rates to stimulate the economy, McCann continued.
According to the CME FedWatch Tool, traders of Fed-funds futures are still pricing in a 96% chance that the Fed will lower interest rates at least twice more by the end of the year.
On Thursday night, Bitcoin increased by 0.1% to trade at $93,713. The Dow Jones Industrial Average was up 1.2% on Thursday, and U.S. markets concluded the day higher.
