Bitcoin had inklings of performing like a store of value in April, in contrast with much of its history.
However, Bitcoin has still more closely mirrored the performance of speculative tech stocks since the beginning of the year.
Is the perception of Bitcoin’s properties and value currently changing?
Shares of the Bitcoin(CRYPTO: BTC)-focused exchange traded fund iShares Bitcoin Trust ETF(NASDAQ: IBIT) rallied 14.3% in April, according to data from S&P Global Market Intelligence .
The IBIT is the most-traded and liquid Bitcoin ETF, and is run by Blackrock(NYSE: BLK), the largest asset manager in the world. IBIT is essentially a way to buy Bitcoin through traditional custodial entities, and its value tends to mirror the price of Bitcoin exactly.
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Bitcoin has often been touted as a store of value and hedge against geopolitical disaster or runaway inflation, similar to gold; however, Bitcoin hasn’t really traded that way in the past. Typically, Bitcoin’s performance has mirrored that of speculative technology stocks during past downturns.
However, the unique dynamics following April 2 “Liberation Day” tariffs led Bitcoin to actually display some hints of differentiated performance against tech stocks — although like tech stocks, it also recovered as trade war fears ebbed toward the end of the month.
Up until April 2, Bitcoin was having a pretty terrible year, performing relatively in line with the Nasdaq Composite index in anticipation of the April 2 tariff announcement.
Interestingly, following the April 2 tariff announcements, Bitcoin fell, but not as much as tech stocks did. Then from roughly April 8 to April 21, Bitcoin actually appreciated, even though tech stocks took another leg down, with Bitcoin actually mirroring the performance of gold during that time:
After April 2, a few unusual things happened. Long-term bond yields went up even as the value of the dollar declined. Usually, when U.S. government bond yields rise, the dollar strengthens. But after the tariff announcement, bonds went up but the dollar declined. This is usually a phenomenon of emerging markets, and signaled perhaps international investors selling U.S. assets, as the U.S. became seen as a source of risk, which is rare.
With U.S. Treasuries perhaps not regarded as the safe haven they were and the dollar’s supremacy in question, it’s perhaps not surprising that Bitcoin, regarded by some as an alternative store of value, rallied.
What is interesting is that on April 22, after Treasury Secretary Scott Bessent said that there will probably be a “de-escalation” with China, stocks experienced a big relief rally. The price of gold, which had appreciated all year, declined slightly on the lowering of risk. However, Bitcoin actually rallied, in line with tech stocks.
So, it appears Bitcoin had the best of both worlds in April: It acted somewhat as a hedge against a weak dollar and U.S. financial instability, but also as a “risk-on” technology play when trends reversed.
While the price action in Bitcoin was nice to see in April, it’s unlikely Bitcoin can act both as a “risk-off” hedge against global economic disaster but then also display the “risk-on” characteristics of tech stocks. Assets should really display one characteristic or the other. But Bitcoin is still a very young asset, so investors may still be figuring out its investment characteristics.
It should also be noted that when stepping back to the beginning of the year, Bitcoin has still mostly trended along with tech stocks, and has underperformed gold by a large degree. Gold, of note, has traditionally been hedge against global currency crises and runaway inflation.
Therefore, April was a definitely interesting month for Bitcoin, in that it began to deviate somewhat from tech stocks in performance, and had inklings of being regarded as a “safe haven” against geopolitical turmoil. But as Bitcoin’s underperformance relative to gold since the beginning of the year shows, Bitcoin is perhaps not quite at that level, yet. As of now, Bitcoin is acting somewhat in between the dichotomous assets of tech stocks and gold.
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Billy Duberstein and/or his clients have positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
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