Bitcoin: Risk-On Asset, Less Store of Value

Bitcoin's market dynamics have been shifting, with recent trends indicating that the cryptocurrency is increasingly being treated as a risk-on asset rather than a pure store of value, according to a recent report by Bitfinex. This evolution is evident in several key aspects of Bitcoin's market behavior.

Bitcoin's price has been consolidating within a range of $91,000 to $102,000 for over 75 days, reflecting a decline in volatility and an increase in market stability. This trend suggests that Bitcoin is becoming more mature and less volatile, which is typical of a risk-on asset.

Bitfinex's report highlighted that Bitcoin's correlation with equities has strengthened, while its relationship with gold has weakened. This shift indicates that Bitcoin is being perceived more as a risk asset rather than a traditional store of value. Additionally, Bitcoin remains sensitive to macroeconomic developments and geopolitical events, such as the recent imposition of new tariffs by President Donald Trump on Mexico, Canada, and China.

Despite its reputation as "digital gold," Bitcoin has not mirrored gold's recent rally. The correlation between Bitcoin and the S&P 500 has strengthened, while its correlation with gold has weakened. This suggests that Bitcoin is more closely tied to the broader financial markets and is being influenced by the same factors driving equity markets.

Bitcoin has yet to see the long-term institutional inflows that have driven gold's price surge. Central banks, sovereign wealth funds, and institutional investors have significantly increased gold holdings amid economic uncertainty, whereas Bitcoin remains primarily driven by speculative demand.

The trading of spot Bitcoin exchange-traded funds (ETFs) has contributed to their broader adoption, but these investment instruments remain volatile. Although ETFs collectively hold over $116 billion in assets under management, equivalent to 6.08% of Bitcoin's total supply, ETF flows have been inconsistent, with significant outflows of $234.4 million and $140.2 million on separate days last week.

In contrast, gold has benefited from structural buying, as investors seek hedges against inflation, economic instability, and the effects of Federal Reserve interest rate policies. The Trump administration's aggressive trade stance and ongoing fiscal expansion have further driven institutional allocations toward gold, solidifying its role as a defensive asset. However, unlike gold, which has benefited from defensive positioning, Bitcoin is