In the past few weeks, Donald Trump’s proposed reciprocal tariffs have sent shockwaves through global markets, leading to significant losses on Wall Street, with the Dow dropping over 10% in two days last week. However, a recent 90-day tariff pause brought a wave of optimism to the stock market, with the Nasdaq rebounding by 12.6%. While stocks were erratic, the cryptocurrency market, particularly bitcoin, remained steady, hovering around $81,000.
Bitcoin’s minor fluctuations are particularly noteworthy as it has historically shown a strong correlation with U.S. indices, especially the Nasdaq. According to Javier Pastor, training director at Bit2Me, “normally, it had a multiplier effect of two or three; in 2020 and 2021, when the stock market fell by 10%, bitcoin tended to do much worse, falling by between 25% and 30%.” The behavior of altcoins was even more exaggerated, experiencing falls of 40% to 50%.
However, experts believe this correlation between traditional assets and cryptocurrencies has changed over time, primarily due to changes in their user profile. Long-term investors, who hold bitcoin for more than a year and represent 72% of all those investing in the asset, are not selling. Those who are selling are primarily short-term investors who bought in recently and are now trading. Analyst Javier Molina from eToro suggests that the market has “less appetite” for bitcoin, and that short-term speculators are now focused on Tesla rather than bitcoin, which could explain the recent rise in Nasdaq volumes while bitcoin remains stagnant.
Pastor believes the trend can be traced back to the approval of bitcoin ETFs and increased interest from institutional investors, such as BlackRock and Fidelity. “The market seems more mature and legitimate,” he says. Market analyst Javier Cabrera points to another factor: tariffs mainly affect companies, not cryptocurrencies. Bitcoin has no major events looming over it, while U.S. companies continue to face uncertainty due to tariffs and their macroeconomic implications. Molina agrees with this assessment, stating that while bitcoin maintains its behavior, the volatility of other assets has increased.
Recent positive developments in the cryptocurrency sector include the SEC’s dismissal of lawsuits against crypto companies, the appointment of Paul Atkins as chairman of the agency, and a letter to investors from Larry Fink, CEO of BlackRock, suggesting investors may view bitcoin as a safer bet than the dollar.
Experts warn that volatility in the short term is to be expected, but if tariffs lead to a recession and stimulus measures, increased liquidity could benefit bitcoin. In the medium term, experts have differing views. analyst Manuel Villegas from Julius Baer considers bitcoin unlikely to be recession-proof, while Pastor suggests that a more aggressive trade war between the U.S. and China could benefit bitcoin as Chinese citizens may seek refuge in alternative assets like gold and bitcoin if the yuan is devalued. If this currency war continues, Pastor concludes, we could see another derivatives rally, with Chinese citizens moving their funds into gold and bitcoin for safety.