(Bloomberg) – Bitcoin surged past gold and tech stocks in April, rekindling debate over whether the biggest cryptocurrency could serve as a shelter from market turmoil, including the conflicts caused by cleaning up US tariffs.
Most of them read from Bloomberg
President Donald Trump’s announcement of mutual tariffs on April 2 – what he called “liberation day” sent shockwaves throughout the global market. The NASDAQ Composite has dropped by 0.2% from the previous day, while the Bloomberg Dollar Index has dropped by about 4%. Gold, a shelter in a period of uncertainty, flocked to a record high of $3,500 per ounce, returning 6.1% before cutting some profits.
However, Bitcoin has recorded an increase of around 12% since April 1st. It says it will serve as an alternative hedge amid growing concerns about US fiscal policy and institutional stability.
The initial response to tariffs led Bitcoin to move low with risky assets, reflecting a sharp decline in US stocks. However, cryptocurrencies quickly diverged, bringing together as long-term Treasury yields rose and investors sought protection from escalating policy risks. With growing concerns about the independence of the Federal Reserve and the reliability of US economic policies, investors are hoping to fall into Swiss franc, euro, gold and ultimately Bitcoin.
David Lawant, head of research at Falconx, warned against reading too much of the differences from Bitcoin’s recent risk assets. “Decoupling” means breakdown of correlations, but he said the 30-day correlation between Bitcoin and major stock indexes is still around 0.6, far from low.
What stands out even more is the unusually low beta version of Bitcoin during recent market stress, suggesting that investors are beginning to see it as a more mature, long-term asset.
In April, investors poured around $2.9 billion into the Bitcoin Spot Exchange Trade Fund on the US list, showing a sharp reversal, seeing net outflows of $811 million and $3.6 billion from March and February, respectively.
Geoff Kendrick, global head of digital asset research at Standard Chartered, said in a recent memo that he hopes for a “reallocation of strategic assets away from US assets” to fuel Bitcoin’s next gathering. He sees Bitcoin as a hedge against the risks of the financial system, noting that it may be “more effective” than gold due to its “decentralized nature.”