As U.S. tariffs trigger a decline in the stock market across most trading partners, Bitcoin has displayed some surprising resilience. An expert from Unchained explains the reasoning behind this phenomenon.
U.S. stocks are currently experiencing one of their worst performances in years. In contrast, Bitcoin (BTC) has demonstrated considerable resilience, which is encouraging for institutional investors, according to Joe Burnett, Director of Market Research at the crypto financial firm Unchained.
On April 4, the Dow Jones Industrial Average lost more than 2,200 points, adding to the previous day’s decline of 1,679 points. This represented the worst two-day performance ever, leaving many equity investors feeling anxious over the weekend.
Meanwhile, Bitcoin demonstrated relative strength, even beginning a recovery, and actually noted a 2.2% gain over the past 24 hours. Burnett proposed that this could mirror the trend seen in 2020, where Bitcoin prices led the market recovery.
Reflecting on March 2020, Bitcoin quickly reached its lowest point and recovered first (ahead of U.S. equities), a trend that may be repeating now, as Bitcoin has not reached new lows since March 11th.
Due to Bitcoin’s significant volatility, Burnett mentioned that it is frequently the first asset investors liquidate when liquidity tightens. However, since the selloff tends to be rapid and severe, Bitcoin often bottoms out before traditional equities do.
This might also suggest that stocks are approaching a bottom. Supporting this assertion is the AAII investor sentiment survey, which fell to 19.11% on March 13, marking the lowest level since the pandemic began. This extreme negative sentiment could indicate that stocks are poised for a turnaround.
Nevertheless, Burnett warned that this does not guarantee Bitcoin is entirely safe.
Indeed, if stocks continue to decline sharply in the upcoming weeks, it is reasonable to anticipate that Bitcoin may also face another downturn.
