Bitcoin Rallies as Tariff Shock Hits Markets
Bitcoin surged over 12% in April, outperforming traditional assets like gold and tech stocks. The sharp increase came after U.S. President Donald Trump imposed new tariffs on April 2, triggering market disruptions. Dubbed “Liberation Day,” his announcement shook global markets, causing a 0.2% drop in the Nasdaq Composite and a 4% decline in the Bloomberg Dollar Index.
Bitcoin Emerges as an Unconventional Hedge
While gold initially surged to a record $3,500 an ounce, it later settled with a 6.1% gain. Bitcoin, however, defied traditional trends. Despite dropping alongside risk assets after the tariffs, bitcoin quickly reversed, rallying as investors sought safe havens. The climb in long-term Treasury yields added fuel to bitcoin’s rise, reflecting deeper worries about U.S. fiscal policy.
Institutional Doubts Push Bitcoin into the Spotlight
Concerns over the Federal Reserve’s independence and America’s economic credibility drove investors toward alternatives. Safe havens like the Swiss Franc, Euro, and gold saw inflows—but bitcoin also gained attention. The cryptocurrency’s decentralized nature made it attractive during times of institutional uncertainty. Many see bitcoin as an emerging shield against monetary missteps.
Analysts Urge Caution on Bitcoin’s Decoupling Trend
David Lawant from FalconX noted bitcoin’s behavior has diverged from traditional risk assets. However, he warns the trend spans only a few sessions. With a 0.6 correlation to equity indices, bitcoin is still tied to broader market movements. Yet, its lower beta in recent stress events suggests a maturing market perception. Bitcoin may be evolving into a viable, long-term financial asset.
ETF Inflows Signal Rising Investor Confidence in Bitcoin
In a notable shift, April saw nearly $2.9 billion invested in U.S.-listed bitcoin ETFs. This comes after significant outflows in February and March. The renewed demand indicates growing confidence in bitcoin, despite economic turbulence. Institutional investors are possibly viewing bitcoin as a hedge amid rising policy risks and financial instability.
Bitcoin’s Role as a Financial System Hedge Strengthens
Geoff Kendrick of Standard Chartered believes bitcoin will benefit from a strategic move away from U.S. assets. He views bitcoin as a hedge more effective than gold due to its decentralized model. As distrust in the global financial system grows, bitcoin continues to gain legitimacy as a protective asset during crises.