Its inclusion in exchange-traded funds issued by major asset managers like BlackRock and Fidelity in 2024 widened its ownership base, but it may also have changed its “narrative.”It is now more widely seen as a speculative or “risk on” asset like a technology stock.“Bitcoin, and crypto as a whole, have become highly correlated with risky assets and they often move inversely to safe-haven assets, like gold,” Adam Kobeissi, editor-in-chief of the Kobeissi Letter, told Cointelegraph. There’s a lot of uncertainty where BTC is heading, he continued, amid “more institutional involvement and leverage,” and there’s also been a “narrative shift from Bitcoin being viewed as ‘digital gold’ to a more speculative asset.” One might think that its acceptance by traditional finance giants like BlackRock and Fidelity would make Bitcoin’s future more secure, which would boost the safe haven narrative -- but that’s not necessarily the case, according to Venugopal:“Big companies piling into BTC does not mean it has become safer.
It can be a government bond, a currency like the US dollar, a commodity like gold, or even a blue-chip stock. A spreading global tariff war set off by the United States, as well as troubling economic reports, have sent equity markets tumbling, and Bitcoin too — which wasn’t supposed to happen with a “risk off” asset. Bitcoin has suffered compared with gold, too.“While gold prices are up +10%, Bitcoin is down -10% since January 1st,” noted the Kobeissi Letter on March 3.“Crypto is no longer viewed as a safe haven play.” (Bitcoin dropped even further last week.)But some market observers are saying that this wasn’t really unexpected.
No time for over-reactionKobeissi agreed that short-term fluctuations in asset classes “often have minimal relevance over a long-term time period.” Many of Bitcoin’s fundamentals remain positive despite the current drawdown: a pro-crypto US government, the announcement of a US Bitcoin Reserve, and a surge in crypto adoption. The big question for market players is: “What is the next major catalyst for the run to continue? ” Kobeissi told Cointelegraph.“This is why markets are pulling back and consolidating: it’s a search for the next major catalyst.”“Ever since macro investors started seeing BTC as a high-volatility, liquidity-sensitive risk asset, it has behaved like one,” added Acheson.
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Author / Journalist: Cointelegraph by Andrew Singer
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