Bitcoin acting ‘notably different’ from prior market pullbacks, wants to go higher if macro obstacles are removed: Bitwise CIO

Bitwise Chief Investment Officer Matt Hougan said bitcoin is performing “notably different” from prior market pullbacks — noting that bitcoin has been flat over the past month and is acting like an asset that wants to go higher if only macro obstacles would get out of the way.

“Bitcoin is trading at $84,379. One month ago, it was $84,317. That’s a 0.07% return over 30 days,” Hougan wrote in a note to clients early Tuesday. “We’ve had absolutely massive forces buffeting the crypto market on all sides — from the U.S. establishing a bitcoin strategic reserve to President Trump enacting tariffs on the entire world — and we’ve gone precisely sideways.”

The U.S. stock market peaked on Feb. 19 and has fallen around 12% since, with bitcoin down 12.4% over the same period. That compares to the S&P 500’s 24.5% drop in 2022, during which bitcoin fell 58.3%, and the early 2020 Covid crash, where the S&P 500 sank 33.8% and bitcoin 38.1%, Hougan pointed out. The late 2018 escalating trade war between the U.S. and China — during Trump’s first term as president — saw equities slide 19.4% while bitcoin slumped 37.2%.

“In fact, since bitcoin crossed the $1 mark in 2011, it has never outperformed the stock market during a full-on market correction. This time, I think it stands a chance,” the Bitwise CIO said.

Hougan acknowledged that matching stocks’ performance during a downturn is not the same as acting as a hedge asset, and gold has significantly outperformed during this latest pullback. He also conceded that the correction may not yet be over but argued neither detracted from bitcoin’s “remarkable resilience,” as things stand. “The world is unraveling, and bitcoin is trading above $80,000. If that doesn’t give you confidence in its staying power, I don’t know what will,” he said.

Bitcoin is ‘growing up’

Whether or not this time turns out to be different, Hougan believes bitcoin’s recent performance is a sign of maturity, with its hedge-asset potential beginning to eat away at its historical risk asset response.

In earlier cycles, bitcoin’s dominant perception as a risk asset saw it get crushed when markets went risk-off, dropping farther than stocks. However, as more corporations and institutions buy bitcoin, and more governments begin to hold it as a strategic reserve, bitcoin’s hedge asset narrative is gaining traction, Hougan argued.

With investors increasingly treating the foremost cryptocurrency like digital gold, the result is lower beta to equities during down periods, he said. “There’s no guarantee that this relationship will hold, or that the remarkable strength we’ve seen out of bitcoin lately will project into the future. But so far, it’s looking pretty good.”

Last week, Hougan claimed the tariff tantrum was likely bullish for bitcoin as a “more fractured reserve system” forms.

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