Bitwise Chief Investment Officer: Bitcoin's Extraordinary Resilience

Written by Matt Hougan, Chief Investment Officer at Bitwise

Compiled by: Luffy, Foresight News

Have you noticed this striking fact? Over the past month, the price of Bitcoin has barely budged.

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

The crypto market has been hit hard from all sides, from the United States establishing a strategic Bitcoin reserve to President Trump imposing tariffs on the world, but the price of Bitcoin has remained flat.

I wanted to cry when I thought about all the time, energy, and anxiety I had put into studying the markets over the past 30 days.

But on the other hand, I admire Bitcoin’s recent performance. The U.S. stock market peaked on February 19 and has fallen 12.0% since then. During the same period, Bitcoin fell 12.4%. This is significantly different from previous market corrections.

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

Going back further, when the COVID-19 outbreak occurred in early 2020, the S&P 500 plummeted 33.8%… and Bitcoin fell 38.1%.

Earlier, in late 2018, the escalation of the US-China trade war caused the stock market to fall by 19.36%. Bitcoin fell by 37.22%.

In fact, Bitcoin has never outperformed the stock market during any market correction since it broke $1 in 2011. But this time, I think it will be an exception.

Critics will point out that performing in line with stocks during a market downturn does not equate to acting as a hedge asset, and that gold has outperformed Bitcoin during this pullback. This is indeed true.

Others will note that the stock market may not have hit bottom yet, or may have rebounded slightly over the past few days.

Regardless, here’s the key point: Bitcoin looks incredibly resilient right now. The world is in turmoil, and Bitcoin is still trading above $80,000. If that doesn’t convince you of its staying power, I don’t know what will.

Bitcoin is growing before our eyes

You might ask: why is this happening? I think it’s a sign of Bitcoin maturing.

Bitcoin is unique in that its returns are driven by two forces that sometimes work in opposition to each other.

• Risky assets: On the one hand, Bitcoin is a risky asset. As an emerging, technology-driven investment product, it has historically brought high returns but also high volatility.

• Hedge Asset: On the other hand, Bitcoin can play a role similar to gold, providing a hedge against macro policy mistakes and fiat currency devaluation.

In the early days of Bitcoin, the attributes of "risk assets" dominated. At that time, whether Bitcoin could succeed was still full of doubts, so when the market entered the "risk-off" mode, it would suffer a heavy blow, and the decline was greater than that of stocks.

Today, as more and more companies and institutions buy Bitcoin and more and more governments hold it as a strategic reserve, the role of "hedge assets" is becoming more and more obvious. Investors regard it as digital gold. As a result, its beta coefficient relative to stocks decreases during market declines.

I can’t guarantee that this relationship will last, or that the extraordinary resilience we’ve seen in Bitcoin recently will continue into the future. But so far, things are looking pretty good.

It is certainly comforting to see Bitcoin growing as a macro asset.

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