Bitwise: Bitcoin’s extraordinary resilience

Author: Matt Hougan, Chief Investment Officer of Bitwise; Translated by: AIMan@Golden Finance

There is a noteworthy fact: Bitcoin has remained flat in price over the past month.

As I write this memo on April 14, Bitcoin is trading at $84,379. A month ago, it was at $84,317. This means a return of 0.07% in 30 days.

Think about it.

From the United States establishing a strategic reserve of Bitcoin to President Trump imposing tariffs on the whole world, the cryptocurrency market has been hit by absolutely huge shocks from all sides, and our development has completely deviated from the previous trajectory.

When I think about the time, energy, and anxiety I have spent studying the market in the past 30 days, I want to cry.

But at the same time, I am also impressed by Bitcoin's recent performance.

The U.S. stock market peaked on February 19 and has fallen 12.0% since then. Bitcoin fell 12.4% during the same period.

This is significantly different from previous market corrections.

The last time the stock market entered a correction was in 2022, when the S&P 500 fell 24.5% between January 3 and October 12. During this period, Bitcoin fell 58.3%.

Before that, at the beginning of the outbreak of the new crown epidemic in early 2020, the S&P 500 fell 33.8%... and Bitcoin fell 38.1%.

Going back further, in late 2018, the escalation of the Sino-US trade war caused the stock market to fall 19.36%. Bitcoin is down 37.22%.

In fact, since Bitcoin broke the $1 mark in 2011, it has never outperformed the stock market during a full market correction. But this time, I think it has a chance.

Critics will point out that chasing stocks during a downturn is not the same as acting as a hedge asset, and that gold has outperformed Bitcoin in this pullback. It is.

Others might note that the stock market may not have bottomed yet, or that it has rebounded over the past few days (just like Bitcoin). (To be more timely, I used data as of today's posting date.)

But none of this can obscure a more important point: Bitcoin is looking very resilient right now. The world is falling apart, and Bitcoin is trading at over $80,000. If that doesn't give you confidence in its staying power, I don't know what will.

Bitcoin is growing before our eyes

You might ask: Why is this happening? I think this is a sign of Bitcoin maturing.

Bitcoin is unusual in that its returns are driven by two forces that sometimes work against each other.

• Risk Asset:In some ways, Bitcoin is a risk asset: an emerging, technology-driven investment that has historically delivered high returns but also high volatility.

• Hedge Asset:In another sense, Bitcoin can play a role similar to gold, a hedge against macro policy errors and fiat currency debasement.

In Bitcoin's early days, the "risk asset" element dominated. Bitcoin's success was questionable, so when the market went into "risk-off" mode, Bitcoin suffered, falling even more than stocks.

Today, as more businesses and institutions buy Bitcoin, and more governments hold it as a strategic reserve, the “hedge asset” narrative is gaining traction. Investors are increasingly viewing it as digital gold. As a result, Bitcoin has a lower beta than stocks during periods of market decline.

There is no guarantee that this relationship will last, or that the incredible strength we have seen in Bitcoin recently will continue into the future. But so far, things are looking pretty good.

Our children are growing up and becoming a great asset. That is a comforting thing.