Bitcoin exceeded $94,000, showcasing resilience against risky assets during volatile market conditions. Analysts, including Gautam Chhugani from Bernstein, praised this performance as unprecedented. Investors may be viewing Bitcoin more as a stable store of value amidst geopolitical uncertainties and trade policy fluctuations, despite concerns over inflation and market stability.
Bitcoin has recently demonstrated resilience compared to other risky assets, particularly amidst fluctuating market conditions. The cryptocurrency surged past $94,000, indicating a potential reevaluation by investors of its value, especially after falling to $76,000 in April. Analyst Gautam Chhugani from Bernstein remarked, “In all my time covering crypto, this is the best price action I have seen on Bitcoin.” He emphasised the necessity for crypto exposure during such volatile times.
This surge contrasts sharply with Bitcoin’s usual performance as a risk asset, which typically shines during bullish markets. Interestingly, Bitcoin has outperformed riskier assets, such as technology shares, during downturns while also rising closely with equities in more optimistic market conditions. Chhugani articulated this phenomenon: “Relative resilience during Nasdaq decline. And then participates with higher beta upon Nasdaq relief — best of both worlds!”
Luke Nolan from CoinShares supports this perspective, suggesting that investors might be reassessing Bitcoin’s role as a non-sovereign store of value, particularly due to geopolitical uncertainties and potential policy errors such as those related to trade. Notably, US tariffs under President Trump have added to market uncertainty, weakening the dollar and prompting investors to seek alternatives like Bitcoin.
Despite this positive trend, the sustainability of Bitcoin’s recent performance remains uncertain. Analysts caution against inflationary pressures resulting from ongoing trade tensions. Historically, Bitcoin has not sustained its value during economic stress—evidenced by its severe drops during inflation spikes, such as a 9.1% inflation rate in June 2022. However, Chhugani maintains optimism, stating, “We think Bitcoin is part gold and part risk asset.”
There are indications that President Trump may be easing his stringent tariff policies, with tariffs potentially decreasing significantly. This shift may account for Bitcoin’s recent gains, particularly following a 2.5% rise in the S&P 500 index post-commentary. Of note, a continued divergence between Bitcoin and stock performance could pique the interest of investors, possibly triggering further price increases for Bitcoin in an unstable equity market, according to Nolan.
