Search For A Safe Haven – Consider Bitcoin

Summary Bitcoin has been trading as a high-beta risk-on asset during the early stage of the current stock market selloff. Bitcoin has been trading more as a safe haven during the recent selloff as the US dollar depreciated. Bitcoin overperformed Nasdaq 100, but it underperformed gold over the last 30 days. At this point, I would not be shorting Bitcoin anymore, although I would not be buying it either, until more clarity emerges. Upgrade From Sell to Neutral I rated Bitcoin ( BTC-USD ) as a Sell on February 7th . The basic bearish case was that Bitcoin was trading as a risk-on asset, purely on sentiment, heavily correlated with the tech stocks and Nasdaq 100 ( QQQ ). The hype around a possible US Sovereign Wealth Fund accumulating Bitcoin also added to what I considered to be irrational bullish sentiment at the time. Broadly, I was bearish on the overall stock market, and especially the tech, and I expected that the Gen AI bubble would burst, and with it the Bitcoin bubble. This broad bearish thesis proved to be correct, as the stock market fell by 20–25% from the peak—and Bitcoin also sold off. However, Bitcoin held much better than I expected during the current selloff. Specifically, since the February 7th Sell rating, the Bitcoin price fell by 8.4%, while the S&P 500 fell by 15.2%. Thus, Bitcoin outperformed the S&P 500, as the sentiment weakened. The macro situation has changed since February 7th. Specifically, due to US policy actions, primarily the tariffs, and the unfolding issue of the Fed’s independence, the foreign investors have started to question the status of the US dollar as a global reserve currency, which caused a massive search for the alternative safe haven assets. Bitcoin has been under consideration as one of possible safe havens. Thus, given the current situation, I would not advise shorting Bitcoin anymore. Yes, the tech selloff is likely to continue, which could push the value of Bitcoin much lower, but at the same time, the macro situation could deteriorate and Bitcoin could prove to be a safe heaven, and significantly rise in value. At this point, I am not ready yet to declare Bitcoin as a safe haven, and recommend a buy, but I am actively monitoring the price action. However, I am upgrading Bitcoin from Sell to Neutral. BTC-USD Tokic Feb 7th (Seeking Alpha) The Bearish Case The bearish case for Bitcoin remains the same—Bitcoin is a high Beta risk-on asset, trading strictly on sentiment. Here is the chart showing the almost perfect correlation between Nasdaq 100 and Bitcoin in 2025 YTD. So, the bearish case seems to be intact, except that the Nasdaq 100 is down by 15% YTD, while Bitcoin is down by 5.5%. Note, Nasdaq 100 is dominated by the tech mega cap stocks with extraordinary profitability, although overvalued based on traditional valuation metrics. Bitcoin has no earnings and no intrinsic value. Thus, it was reasonable to expect that Bitcoin would be down more than Nasdaq 100 as the sentiment sours. Yet, Bitcoin outperformed Nasdaq 100, which questions the validity of the bearish outlook for Bitcoin as a high beta risk-on asset. It is particularly important to observe that the correlation between Nasdaq and Bitcoin started to break in mid-April as the US dollar ( DXY ) came under attack. Data by YCharts The Bullish Case The true believers in Bitcoin always argued that Bitcoin would soar if the US dollar starts to get questioned as a global reserve currency. Thus, the bullish case for Bitcoin is that Bitcoin is a possible safe heaven, and as such a good hedge against a sharp depreciation in the US dollar. So, let’s look at the performance of traditional safe havens over the last 30 days, which includes the Liberation Day and the start of the Trump-Powell conflict. To refresh, the Liberation Day introduced the punitive tariffs on US global trading partner, which have been delayed for 90 days except China. The result of this aggressive tariffs policy is a possible foreign capital outflow from the US, which is negative for the US dollar and thus, positive for Bitcoin. In addition, Trump’s attempt to influence the Fed rate cut and the threat to fire the Fed Chair Powell undermines the Fed’s independence and thus, it should be dollar negative and Bitcoin positive. Thus, over the last 30 days, the ultimate safe haven gold ( GLD ) is up over 13%. The traditional safe haven currency Swiss franc ( FXF ) is up by over 9%. The Euro ( FXE ) has emerged as an alternative safe haven or as an alternative global reserve currency, primarily due to expectations that the European Union will start issuing the common debt to finance the military/infrastructure investments. These common EU Bonds could be an alternative to the US Treasury Bonds, if issued in sufficient quantity to satisfy the global demand. The Euro is up by over 6% over the last 30 days. And then, we have Bitcoin, which is up to be over 3% over the last 30 days—and this performance can’t be ignored. Bitcoin held value during the April selloff in the stock market as the US dollar weakened, which supports the bullish case. Data by YCharts Why Would Bitcoin Be a Safe Haven? If the capital outflow from the US continues and accelerates, what do you buy as a hedge against the depreciating US dollar and against the broad macro volatility? The first choice for many is gold. But gold is a physical asset that must be stored in a vault and cannot be easily transported across borders, and cannot be used as a digital payment. Bitcoin is attractive because it can be used for digital payment from anywhere in the world using a fully decentralized blockchain platform—that’s the main attraction, in addition to the feature of limited supply. The value of other currencies, like the Euro, will be the function of local politics and policies, which could be volatile, and there is no guarantee that the US economy would underperform the EU economy. Bitcoin does not have these issues. Implications Bitcoin has been trading like a high-beta risk-on asset during the early stage of the current selloff in the stock market. However, recently Bitcoin has been trading as a safe haven asset, correlated with gold and Swiss franc as the US dollar came under attack and started to depreciate. What happens next with Bitcoin is a question. Bitcoin could continue to fall with Nasdaq 100 if the selloff accelerates, and sentiment deteriorates. Alternatively, Bitcoin could continue to trade as a safe heaven, together with gold, if the US dollar continues to depreciate. At this point, it’s not clear how Bitcoin will continue to behave. Thus, I am upgrading Bitcoin from Sell to Neutral until more clarity emerges.

Source: Seeking Alpha