Bitcoin’s correlation with global markets—attributed by some to increased institutional investment and algorithmic trading—challenges the narrative of it being a safe-haven asset, similar to gold.
Bitcoin's Correlation With Markets Grows, Challenging 'Safe Haven' Narrative
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Bitcoin’s ‘Safe Haven’ Claim Challenged
Following the U.S. imposition of a 25% tariff on Canadian and Mexican imports, bitcoin ( BTC) briefly plummeted below $93,000, dragging the crypto market down. The top crypto asset appeared to recover shortly after the Trump administration and Mexico agreed to suspend the tariff imposition for 30 days. However, BTC again fell below $100,000 when the U.S. President Donald Trump‘s second trade war with China commenced with a blanket 10% tariff hike on Chinese imports.
Reports of the U.S. Congress launching a crypto working group appeared to offset, at least briefly, the effects of the U.S.-China trade war on Bitcoin. Nevertheless, BTC’s trends in early February highlighted the significant impact of global events on the cryptocurrency.
Critics argue that BTC’s correlation to global events undermines claims that it is an alternative asset like gold. Some experts believe the entry of large institutional investors, who bring their trading strategies and risk assessments, contributes to bitcoin’s apparent correlation with traditional markets.
Luke Xie, co-founder and CEO of Satlayer, noted that before the advent of bitcoin exchange-traded funds (ETFs) and institutional involvement, the correlation was less apparent. However, with more institutions adding BTC and other crypto assets to their portfolios, the correlation will likely continue to grow.
“For institutional investors, Bitcoin is still considered a higher-risk asset compared to staples like treasury bonds or blue-chip stocks. As a result, when risk-off events such as trade tariff announcements or geopolitical upheavals kick in, crypto is first to be sold. This behavior is partly due to algorithmic trading and institutional mandates that reduce exposure to risk assets during periods of uncertainty,” Xie explained.
Kyle Ellicott, an executive director at the Stacks Asia Foundation, told Bitcoin.com News that the increasing correlation suggests cryptocurrency is evolving into a mainstream asset class. Ellicott asserts this correlation likely will “persist through 2026, largely driven by Bitcoin’s growing prominence in government policy discussions around strategic reserves.”
Following its latest crash, some Bitcoin critics insist the cryptocurrency’s apparent correlation with global markets disproves the “safe haven” or “digital gold” narrative often espoused by Bitcoin maximalists. They argue recent trends, in which gold has outperformed bitcoin, prove the latter is not yet seen as a reliable safe haven asset.
Alexander Mamasidikov, CEO and founder of Crossfi, shares this view, arguing that bitcoin has failed to achieve the status of a stable asset.
“It remains a high-yield but risky instrument. During periods of significant growth, it attracted massive investments, but there were also periods of substantial losses. Perceptions of Bitcoin continue to evolve as the market matures and becomes more regulated,” Mamasidikov said.
The Crossfi CEO’s sentiments are echoed by his counterpart at Satlayer, who believes bitcoin’s high volatility overshadows its attractiveness as a store of value. Nevertheless, Xie asserts that as the global climate becomes more turbulent, bitcoin’s appeal as a safe haven asset will only grow.
“A turbulent environment may enhance Bitcoin’s safe-haven appeal, despite its volatility, as investors look for assets free from direct government control and weakly correlated with traditional monetary policies,” Xie said.
