Bitcoin’s Crucible: Can It Outperform in a Market Meltdown?
70min read The ETF Store’s President, Nate Geraci, has thrown down a gauntlet to Bitcoin skeptics: “If Bitcoin is truly a store of value, why did it crash alongside stocks in 2025?” The question cuts to the core of Bitcoin’s identity as an asset. Is it a resilient digital gold, or a speculative play tied to equity markets? With the cryptocurrency’s price oscillating wildly—recently dipping below $80,000 amid a historic U.S. stock sell-off—the answer could redefine its role in global finance.
Ask Aime: "Why did Bitcoin's price drop to $80,000 as stocks were sold off in 2025, hinting at its speculative nature?"
The Test of Fire
Geraci’s challenge stems from Bitcoin’s performance during the late 2024 stock market crash, when the S&P 500 plummeted and Bitcoin’s price fell to $79,000—a 15% drop from its 2024 high. For skeptics, this proved Bitcoin’s speculative nature: it acted like a “high-beta asset,” rising and falling with risk-on markets rather than serving as a safe haven.
Yet proponents, including Bloomberg’s Eric Balchunas, counter that Bitcoin’s purpose is not to hedge against stock declines but to guard against monetary inflation.
Ask Aime: Why did Bitcoin dip to $80,000 when the S&P 500 plummeted?
The Institutional Tide
The real game-changer for Bitcoin is its institutional adoption. The launch of spot Bitcoin ETFs in 2024 brought in over $100 billion, with BlackRock’s iShares Bitcoin Trust alone amassing $53 billion in its first year. These inflows signal a shift from retail speculation to institutional legitimacy.
The U.S. government’s creation of a Strategic Bitcoin Reserve in early 2025—storing 207,189 seized coins—further underscores its status. “This isn’t just about price; it’s about recognition as a national asset,” says Geraci. Even critics admit Bitcoin’s scale is now too large to ignore: its $800 billion market cap dwarfs all other cryptocurrencies combined.
Regulatory Crossroads
Bitcoin’s future hinges on regulatory clarity. The SEC’s new pro-crypto leadership under Paul Atkins has paused enforcement actions and is crafting frameworks to legitimize token registrations. Meanwhile, the EU’s MiCAR regulation, effective late 2024, aims to standardize crypto trading but introduces compliance hurdles.
President Trump’s 2025 Executive Order revoking prior anti-crypto policies has fueled optimism. “The U.S. is positioning itself as a crypto superpower,” says Geraci. Yet risks remain: a single regulatory misstep or geopolitical conflict could send Bitcoin into a tailspin.
The Bull Case: Bitcoin as Digital Gold
Bulls argue Bitcoin’s fixed 21-million supply and decentralized governance make it unique. With central banks globally printing money to combat inflation, Bitcoin’s scarcity offers a hedge. BlackRock’s report notes its “low correlation to traditional assets,” a trait vital for diversified portfolios.
Historically, Bitcoin’s price surges post-halving cycles (when mining rewards halve) suggest it could hit $100,000 again in 2025. “It’s still early,” says Balchunas. “Gold took centuries to gain trust; Bitcoin has done it in decades.”
The Bear Case: Speculation Without Substance
Skeptics dismiss Bitcoin as a “greater fool” asset with no intrinsic value. Its price volatility—swinging 20% in days—resembles a casino more than a store of value. Critics point to the FTX collapse and $1.9 billion in crypto thefts as proof of systemic risks.
Even Bitcoin’s ETF success has limits. When equities fell in late 2024, investors pulled $2.1 billion from Bitcoin ETFs, showing its ties to risk sentiment. “Until Bitcoin decouples from stocks in a crash, it’s not gold—it’s just gold’s poorer cousin,” argues a Bloomberg columnist.
Conclusion: The Answer Lies in 2025’s Crosswinds
Geraci’s challenge forces a reckoning: Bitcoin must prove it can thrive independently of equities. With $110 billion in institutional ETF inflows, geopolitical tensions favoring non-sovereign assets, and regulatory tailwinds, the odds tilt bullish. Yet risks—from EU regulations to a global recession—are existential.
The data tells two stories: Bitcoin’s 14% rally over 30 days in early 2025, driven by de-dollarization hopes, contrasts with its 2024 stock-market-linked slump. The answer to Geraci’s question hinges on whether Bitcoin can stabilize as a consistent hedge, not just a crisis reflex.
For now, the jury is out—but the stakes have never been higher. As one analyst put it: “Bitcoin’s future isn’t about price. It’s about whether investors will trust it with their wealth when everything else burns.”
The next crash will decide.
