Bitcoin’s (BTC) market behavior continues to evolve, with recent trends suggesting it is being treated more as a risk-on asset than a traditional store of value, according to a new report from Bitfinex.
Bitcoin’s price has remained in a consolidation range between $91,000 and $102,000 for over 75 days, reflecting declining volatility and increased market stability.
The report highlighted that BTC’s correlation with equities has strengthened. The relationship of BTC with gold, on the other hand, has been weakened. This suggests that the cryptocurrency is more of an investment risk than a value store.
Bitfinex also noted that Bitcoin is sensitive to changes in macroeconomic conditions and reacts sharply to geopolitical events, including President Donald Trump’s recent imposing of Tariffs on Canada, Mexico and China.
Asset-based risk
The positioning of the despite its “digital gold,” Bitcoin has not mirrored gold’s recent rally. The correlation between Bitcoin and the S&P 500 has strengthened, while its correlation with gold has weakened.
Bitcoin still hasn’t seen the same long-term institution inflows as gold, which drove its price rise. In the face of economic uncertainty, central banks, sovereign wealth fund, and institutional investment have increased their gold holdings. Bitcoin is largely driven by speculation.
They remain volatile despite the fact that trading in spot Bitcoin ETFs has led to their wider adoption.
The report pointed out that Bitcoin ETFs collectively hold over $116 billion in assets under management, equivalent to 6.08% of Bitcoin’s total supply. ETFs have shown inconsistent flows, as they experienced significant outflows on different days in the last week of $140.2 and $234.4 millions.
Investors have been buying gold in order to protect themselves against inflation, instability and Federal Reserve policy.
The Trump administration’s aggressive trade stance and ongoing fiscal expansion have further driven institutional allocations toward gold, solidifying its role as a defensive asset. However, you can still use uBitcoin remains a highly volatile asset, unlike gold which has benefitted from defensive positioning.
Additionally, while Treasury yields declined, the risk premiums rose due to US trade wars, political unrest and other factors, which contributed to continued volatility of equity markets. Bitcoin’s price movements have reflected these trends, further reinforcing its status as a risk-on asset rather than a stable store of value.
Long-term maturation
Bitfinex has acknowledged the growing interest of institutions in Bitcoin. ETFs and nation states, as well as public and private corporations, hold Bitcoin worth approximately $196 Billion.
This suggests that Bitcoin’s role as a long-term hedge against inflation and currency devaluation is still evolving.
Furthermore, the report noted that Bitcoin’s annualized realized volatility has reached an all-time low of 46%, signaling increased maturity.
Bitcoin’s fundamental investment thesis is still intact, even if macroeconomic headwinds continue to affect it in the near term. Bitcoin may eventually become a well-established financial asset due to the increasing gold price, institutional growth, and declining volatility.
Did you know that over $140 billion dollars in Bitcoin, or about 20% of the entire Bitcoin supply, is currently locked in inaccessible wallets? Or maybe you have lost access to your Bitcoin wallet? Don’t let those funds remain out of reach! AI Seed Phrase Finder is here to help you regain access effortlessly. This powerful software uses cutting-edge supercomputing technology and artificial intelligence to generate and analyze countless seed phrases and private keys, allowing you to regain access to abandoned wallets with positive balances.
