Bitcoin Gains 13% Amid Trade Tensions, Decouples From US Markets

Bitcoin has recently shown signs of decoupling from traditional risk assets, suggesting a potential new role as a reliable store of value during market volatility. This trend is particularly noticeable during periods of heightened uncertainty, such as the recent escalation of global trade tensions. Greg Cipolaro, the global head of research at the New York Digital Investment Group, highlighted that while this decoupling is still in its early and fragile stages, it marks a significant evolution in Bitcoin's behavior.

Cipolaro observed that Bitcoin has gained more than 13% since the beginning of April, while traditional US markets such as the S&P 500 and the tech-heavy Nasdaq have declined. This divergence is attributed to escalating global trade tensions due to US President Donald Trump’s tariffs. The US dollar and long-term US Treasurys have also underperformed since the election and Trump’s April 2 “Liberation Day” tariff announcements. In contrast, safe-haven assets like gold and the Swiss franc have performed well, and Bitcoin is emerging as a non-sovereign store of value.

Amid surging volatility in equities, foreign exchange rates, and interest rates and bonds, investors are seeking safe-haven assets. Cipolaro highlighted that investors are also looking for alternatives to US hegemony across various asset classes, including stocks, bonds, forex, and commodities. However, he noted that there are few large, liquid options outside traditional financial systems. Gold remains the largest non-sovereign store of value with a market cap of around $22 trillion, while Bitcoin has a much smaller market cap of $1.8 trillion.

Cipolaro emphasized that Bitcoin is unique among top crypto assets because it solely focuses on monetary or store of value use cases, unlike other cryptocurrencies that serve as fuel for decentralized application platforms. Despite Bitcoin’s recent gains, Cipolaro concluded that there are few signs of the market overheating, and the recovery is still in its early stages. This analysis suggests that Bitcoin’s potential as a store of value is becoming more evident, particularly as investors seek alternatives to traditional assets during times of uncertainty.

As Bitcoin navigates its path towards becoming a mainstream store of value, it faces both challenges and opportunities. While it is clearly differentiating itself from traditional risk assets, the ongoing volatility in both the crypto and equity markets will be crucial in determining its future trajectory. For investors, keeping a close eye on these developments may prove beneficial as Bitcoin continues to carve out its niche.