Key Takeaways

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Analyzing short-term observations in financial markets reveals much about the evolving roles of assets like Bitcoin. Recent events in April are pivotal in understanding Bitcoin’s growing reputation as a reliable store of value.

A Context of Instability

The turmoil ignited by President Trump’s tariffs announcement on April 2 resulted in significant declines in stock prices, with indices such as the Nasdaq 100 and S&P 500 dropping by 4.8% and 5.4% respectively. Following the announcement, Bitcoin also saw a drop in price as the VIX Volatility Index reached highs not witnessed since the onset of COVID-19, amid fears of retaliatory trade measures.

However, within a matter of days, Bitcoin’s price began a robust recovery, leading to decreased correlations with traditional stocks, dropping below 0.50, before rising again after the April 9 pause on tariffs shifted sentiment back into a ‘risk-on’ mode.

Bitcoin’s correlations to traditional markets in April

Source: Hashdex Research with data from CF Benchmarks and Bloomberg (April 01, 2025 to April 30, 2025). 30-day rolling correlations (considering only workdays) between Bitcoin and traditional finance indices.

This transient observation underscores a shifting perspective among investors regarding Bitcoin. Despite some still viewing it as a high-risk asset, institutional attitudes increasingly reflect a more discerning comprehension. Bitcoin recovered faster than the S&P 500 following major global events in the past few years, exhibiting qualities akin to gold during periods of stress.

Bitcoin Compared to Traditional Assets: 5-Year Returns

Bitcoin vs. traditional assets

Source: CaseBitcoin, Return data from May 1, 2020 to April 30, 2025 (CaseBitcoin.com)

Analyzing Bitcoin’s long-term returns is essential as they highlight its impact on traditional portfolios. Allocating even a small percentage of Bitcoin within a conventional 60% stock/40% bond mix has improved risk-adjusted returns in 98% of rolling three-year periods over the past decade. This indicates that Bitcoin’s positive returns often outweigh its short-term volatility.

While we may not yet declare Bitcoin as universally accepted as ‘digital gold’, the narrative is gaining traction, supported by its reactions to geopolitical shifts. Its limited supply, liquidity, accessibility, and resistance to central bank controls distinguish it in ways traditional assets cannot replicate—offering a compelling case for any investor seeking portfolio diversification and wealth preservation over time.