In a rare turn of events, the past week witnessed simultaneous declines in U.S. stocks, Treasury bonds, and the dollar. Macro investor Jordi Visser described this phenomenon as a sign of the system's formal breakdown. Despite these turbulent conditions, Bitcoin's price movement remained notably subdued, failing to react with the same intensity as gold. This divergence, according to Visser, stems from deep-rooted skepticism within institutional finance, which views Bitcoin through a lens typically reserved for equities.
Understanding the Divergence: Bitcoin vs. Gold
Historically, U.S. government bonds have been considered the lowest-risk assets. However, they have recently lost this characteristic, with U.S. bonds falling over 5% month-to-date. In such an environment, Bitcoin's role becomes complex. Its underperformance relative to gold is not a denial of its long-term investment value but rather a reflection of current institutional attitudes.
Visser emphasizes that Bitcoin's opportunity may not arise during the crisis itself but in its aftermath. When monetary authorities initiate aggressive stimulus measures, that's when Bitcoin could shine. He predicts increased volatility and a decline in trust toward traditional financial infrastructure, which could serve as long-term catalysts for Bitcoin.
The Global Liquidity Cycle and Bitcoin's Trajectory
Visser closely links Bitcoin's trajectory to the global liquidity cycle. A weakening dollar, he notes, increases global liquidity, particularly benefiting emerging markets and risk assets. In a world where nationalism is replacing globalism and bilateral trust continues to erode, decentralized systems like Bitcoin are poised to become increasingly important.
He does not see Bitcoin as a failed safe-haven asset but rather as an emerging asset still awaiting its structural breakout moment. This moment, Visser believes, will arrive when Wall Street stops treating Bitcoin as a risk-on tech proxy and central banks resume monetary stimulus.
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Frequently Asked Questions
Why is Bitcoin underperforming compared to gold?
Bitcoin's current underperformance is largely due to institutional skepticism. Many Wall Street investors still view Bitcoin through an equity-like risk lens, which dampens its reaction during macroeconomic turmoil.
When does Bitcoin typically perform best?
According to experts, Bitcoin may not peak during a crisis but often gains momentum after monetary authorities implement aggressive stimulus measures, boosting global liquidity.
How does the global liquidity cycle affect Bitcoin?
A decline in the dollar increases global liquidity, which often benefits risk assets and emerging markets. Bitcoin, as a decentralized asset, tends to perform well in such environments, especially as trust in traditional systems wanes.
Is Bitcoin a safe-haven asset?
While not traditionally classified like gold, Bitcoin is increasingly seen as a emerging store of value. Its performance during crises is complex and influenced by structural factors like institutional adoption and regulatory clarity.
What could trigger Bitcoin's next major rally?
A shift in Wall Street's perception—from viewing Bitcoin as a speculative tech asset to recognizing it as a macroeconomic hedge—coupled with renewed monetary stimulus, could serve as key catalysts.
How does eroding trust in traditional finance impact Bitcoin?
As confidence in centralized financial infrastructure declines, decentralized alternatives like Bitcoin gain relevance. This is particularly evident in regions facing political instability or currency devaluation.