Bitcoin Surges 2% to $88,500 as Trade War Tensions Boost Safe-Haven Demand

Bitcoin (BTC) continued to diverge from traditional stock markets as trade war tensions escalated, reaching a price of $88,500 at the April 21 Wall Street open. This movement highlighted Bitcoin's decoupling from equities, as stock markets faced renewed selling pressure. The S&P 500 and Nasdaq Composite Index both experienced declines of over 2% during this period.

The escalation in trade war tensions, including warnings from China and Japan about deteriorating relations with the US, and President Donald Trump's renewed attacks on Federal Reserve Chair Jerome Powell over interest rates, contributed to the market volatility. This environment seemed to favor Bitcoin, which continued to rise, matching month-to-date highs above $88,000. Concurrently, gold set fresh all-time highs of $3,430 per ounce, further emphasizing the shift in investor sentiment towards safe-haven assets.

Trading resource The Kobeissi Letter noted the significant decline in technology stocks, with Nvidia and other major stocks experiencing double-digit percentage drops. This downside pressure on technology stocks, coupled with the weakening US dollar index (DXY), which traded at its lowest levels since March 2022, created a favorable environment for Bitcoin and gold. The Kobeissi Letter summarized that while the USD fell to a new 52-week low below 99, Bitcoin and gold surged, indicating a growing preference for these assets as hedges against macroeconomic uncertainty.

Trading firm QCP Capital also expressed optimism, suggesting that Bitcoin was regaining some of gold’s limelight as a hedge against macroeconomic uncertainty. The firm argued that with equities finishing the previous week in the red and extending an April drawdown, the narrative of BTC as a safe haven or inflation hedge was once again gaining traction. This dynamic, if sustained, could provide a fresh tailwind for institutional BTC allocation. QCP Capital also noted early signs of institutional confidence returning, with spot BTC ETF flows turning positive last week, marking a stark contrast to the previous week’s significant outflows. In options markets, positioning had turned more balanced, with risk reversals across tenors flattening out, diverging from the persistent near-dated put skew that had dominated for weeks.