As the U.S. stock market experiences significant declines due to tariffs impacting its trading partners, Bitcoin displays notable resilience, prompting insights from market experts.
U.S. stocks are undergoing one of their worst downturns in years. Despite this, Bitcoin (BTC) is showing relative strength, creating positive prospects for institutional investments, according to market research experts.
On April 4, the Dow Jones Industrial Average plummeted over 2,200 points, following a staggering drop of 1,679 points the previous day. This unprecedented two-day decline has left equity investors feeling uneasy.
In contrast, Bitcoin has demonstrated resilience, rebounding slightly with a 2.2% gain over the past 24 hours. Experts suggest this mirrors patterns observed in 2020, where Bitcoin prices led subsequent market recoveries.
Looking back to March 2020, Bitcoin quickly hit a low and began its recovery before U.S. equities, a scenario that may be repeating as Bitcoin has not reached new lows since March 11.
Typically seen as a volatile asset, Bitcoin is often the first to be sold off when market liquidity tightens. Yet, due to the nature of these rapid sell-offs, Bitcoin often hits its lowest point before stock markets do.
This behavior may indicate that equities are approaching a bottom. Supporting this sentiment is the AAII investor sentiment survey, which registered a decline to 19.11% on March 13, the lowest since the onset of the pandemic. Such extreme pessimism could foreshadow a market reversal for stocks.
Nevertheless, experts urge caution, noting that Bitcoin’s situation remains precarious.
If stocks continue to decline aggressively in the coming weeks, it’s plausible that Bitcoin could face further downward pressure as well.
