Bitcoin acting notably different from prior market pullbacks

Quick Take

• Bitwise CIO Matt Hougan said bitcoin is acting notably different to prior pullbacks and could outperform the stock market during a correction for the first time since 2011.
• Despite President Trumps tariff turmoil in recent weeks and the ensuing volatility, bitcoin has effectively been flat over the past month, Hougan noted.

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.

Bitcoinis trading at $84,379. One month ago, it was $84,317. Thats a 0.07% return over 30 days, Hougan wrote in anoteto clients early Tuesday. Weve had absolutely massive forces buffeting the crypto market on all sides from the U.S. establishing abitcoin strategic reserveto President Trump enactingtariffson the entire world and weve 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 SP 500s 24.5% drop in 2022, during which bitcoin fell 58.3%, and the early 2020 Covid crash, where the SP 500 sank 33.8% and bitcoin 38.1%, Hougan pointed out. The late 2018 escalating trade war between the U.S. and China during Trumps 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 bitcoins remarkable resilience, as things stand. The world is unraveling, and bitcoin is trading above $80,000. If that doesnt give you confidence in its staying power, I dont know what will, he said.

Bitcoin is growing up

Whether or not this time turns out to be different, Hougan believes bitcoins 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, bitcoins dominant perception as a risk asset saw it get crushed when markets went risk-off, dropping farther than stocks. However, as more corporations and institutionsbuy bitcoin, and more governments begin to hold it as a strategic reserve, bitcoins 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. Theres no guarantee that this relationship will hold, or that the remarkable strength weve seen out of bitcoin lately will project into the future. But so far, its looking pretty good.

Last week, Houganclaimedthe tariff tantrum was likely bullish for bitcoin as a more fractured reserve system forms.