Bitcoin Outperforms Nasdaq Amid Market Turmoil, Bernstein Bullish on Digital Assets

Bitcoin has shown resilience during recent market turmoil, with a 10% year-to-date drop compared to the Nasdaq's 16% decline. Despite short-term volatility, Bernstein remains optimistic about the outlook for digital assets, citing several structural catalysts that support Bitcoin's resilience and future growth.

Bitcoin, often referred to as digital gold, is expected to benefit from the same macroeconomic tailwinds that are driving traditional gold prices higher. According to Bernstein’s senior digital asset analyst, Bitcoin's higher beta and potential for growth make it an attractive investment compared to gold. The firm also notes that the U.S. regulatory environment under the Trump administration has been supportive of crypto adoption, with growing political alignment within the digital assets industry.

Bernstein has identified five key catalysts that are expected to drive current and future momentum in the crypto market. The first is the continued institutional demand for Bitcoin, which has remained strong even during recent market corrections. Bitcoin ETFs saw only $4 billion in outflows in February and March, and selling has eased in April. Additionally, nearly 80 corporations worldwide have adopted Bitcoin as a treasury asset, with firms like MicroStrategy continuing to invest in it.

The second catalyst is the potential for the U.S. government to expand its Bitcoin holdings through market purchases. Proposals are under consideration to fund this through gold certificate revaluation or Bitcoin-backed bond issuance. The third catalyst is the reentry of crypto into mainstream finance, driven by positive regulatory moves and institutional interest. Banks are exploring stablecoins for cross-border settlements and expanding into crypto custody, wealth management, and trading.

The fourth catalyst is the expected passage of a stablecoin bill, which is seen as a key regulatory development for the year. This is expected to drive widespread adoption of stablecoin technology within banks and fintechs for payments use-cases beyond crypto capital markets, particularly in remittances and B2B payments. The fifth catalyst is the push from asset managers and brokers, who are investing in crypto infrastructure and viewing blockchain as the foundation for digitizing capital markets. Platforms like Robinhood and Coinbase are leading innovation in tokenized securities and stablecoin settlement.

These catalysts are expected to support Bitcoin's price as it navigates through the current market conditions. However, it is important to note that the cryptocurrency market is highly volatile and unpredictable, and these catalysts may not guarantee a rebound in Bitcoin's price. Investors should conduct their own research and exercise caution when investing in Bitcoin.