Bitcoin’s rocky road to becoming a risk-off asset: analysts investigate

The market for cryptocurrency and traditional currencies was in turmoil on May 5, 2018. The worst day of trading since 2020 saw Bitcoin (BTC), drop over 7%, and the NASDAQ slip over 5%.

Many people hoped for a capitulation in crypto and trade markets. However, one analyst and some evidence suggest that Bitcoin is still a risk-off asset.

Markets are not mathematically-based or infallible. However, a risk-off asset is one that has a high performance asset (or that investors love) that is performing well when overall market sentiment drops.

Risk-off assets are government bonds; tech stocks and cryptocurrency are risk-on assets. When the market mood is positive and the United States Federal Reserve doesn’t raise interest rates, risk-on assets are more successful.

One Bloomberg analyst shared an interesting graph that described “adoption maturation and Bitcoin beating Equities”, suggesting that Bitcoin might finally be showing its true colors as a safe haven in turbulent waters.

This graph shows how volatility in Bitcoin and its performance outperforms that of the Nasdaq 100 stock market index.

Source: Bloomberg Intelligence

Mike McGlone, a key figure in the crypto market explained that it was a “nascent revolution” in fintech and money at the beginning of May.

“The fact that Bitcoin, the world’s most fluid and 24/7 trading vehicle, was down only 15% between 2022 and May 3, compared to 20% for the Nasdaq 100 Stock Index could indicate that crypto is transitioning to a more risk-off asset.”

Mike McGlone was interviewed by Cointelegraph about the report in January. McGlone stated that Bitcoin’s transition to a more risk-off asset would “propel it to $100K by 2022.”

He also stated that the “unstoppable” progress in money and finance is what is most important.

According to InvestAnswers Youtube’s chart, Bitcoin has risen 6% over the past 90-days compared to the Nasdaq’s 12% lowests.

Source: InvestAnswers Youtube

Bitcoin is slowly becoming a store value or “Gold 2.0” as the Winkelvoss twins call it. Popular Youtuber Benjamin Cowen warns that Bitcoin might not reach $100,000 this year due to the “risk-off” economic environment. He also says that inflation will be under control.

Related: Bitcoin celebrates half-way to the halving by setting a new hash rate record

It may be somewhat prescient to still call Bitcoin a “risky” asset, particularly considering that it is currently trading at the mid $30,000s.

There are some certainties, however. Do Kwon will buy Bitcoin in the billions, Michael Saylor will orange-pill big name investors and there will always be 21 million Bitcoin.

2021's Most Anticipated Growth & Wealth-Building Opportunity

Join Thousands of Early Adopters Just Like You Who Want to Grow Capital and Truly Understand Cryptocurrency Together

Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

Close Bitnami banner