Bitcoin (BTC), the world’s largest digital asset by market value, recently held steady as President Donald Trump’s trade war spurred a shift away from U.S. assets.
The so-called decoupling reinforced the belief of crypto advocates that BTC is as a safe haven and a low-beta play relative to equities.
BlackRock’s Head of Digital Assets, Robert Mitchinik, believes the cryptocurrency could actually evolve into a permanent low-beta play reflexively.
“It makes no fundamental sense, and yet when it’s repeated enough, it can actually become a little self-fulfilling, right?” Mitchnik said during a panel discussion at the Dubai Token2049 conference on Wednesday. “It is something that can happen reflexively because enough pundits and research outlets and other commentators have said that it would.”
Investors aggressively dumped the U.S. assets, including the tech-heavy Nasdaq index and the S&P 500, early this month as the escalating U.S.-China trade tensions spurred recession fears. BTC, however, held relatively steady, so much so that on a seven-day basis, the cryptocurrency looked less volatile than the S&P 500.
That short decoupling reinforced the crypto community’s belief in an asset known to be detached from the economic, political and monetary risk of a particular country, spurring renewed capital inflows into the U.S.-listed spot ETFs, Mitchnik explained.
Investors have poured in at least $3 billion in the spot ETFs in the last ten trading days, with BlackRock’s IBIT receiving the most inflows, according to data source Farside Investors.
Mitchinik added that part of the recent decoupling could be due to the transfer of BTC from the less stable hands to more long-term fundamental-driven holders. The shift is “definitely happening,” he said.
Jan van Eck, CEO of VanEck, while speaking at the same panel, said he would like to see bitcoin revert to the pre-2020 period when it was an uncorrelated asset.
The institutionalization of BTC after the Covid crash in 2020 and since the debut of ETFs early last year has led to the cryptocurrency developing correlations with tradfi assets, mainly the Nasdaq index. That has led to BTC losing its appeal as a portfolio diversifier.
Jan van Eck explained that traders would be inclined to hold more BTC if the correlations weaken.
UPDATE (April 30, 09:19 UTC): Adds ‘Reflexively” to headline.
