Bitcoin prices fell below a key psychological threshold on Monday as the financial markets sell-off intensified, but cryptocurrency experts believe it’s likely to hold up better than other asset classes if a global trade war drags on.
The cryptocurrency, which trades around the clock, was at $79,000 Monday afternoon, down fractionally since the morning and recovering some of its earlier losses. It is now down about 15% in the year so far.
Bitcoin is a digital currency and virtual payment system designed to exist outside the control of any central entity, in contrast to fiat currencies which are controlled by governments, like the U.S. dollar or the Swiss franc.
Prices for many cryptocurrencies surged after the November election when Donald Trump pledged to cut regulation and create a strategic bitcoin reserve. Trump also launched a meme coin just days before being inaugurated in January.
“Since the election stocks are down and bitcoin is up,” said Matthew Sigel, head of Digital Assets Research at VanEck, which has $113.8 billion in assets under management, including in several cryptocurrency funds. “It feels to me like the White House’s attempts to reorder global trade may actually be working in bitcoin and crypto’s benefit.”
Despite its origins as an alternative asset class, bitcoin has tended to trade in the same direction as riskier stocks. As the global financial rout continues, bitcoin has also sold off, noted Austin Campbell, a professor at New York University’s Stern School of Business. But that’s been tempered by another trend, as global markets lose confidence in the U.S. dollar, which has long been seen as the world’s most important currency.
“History so far has shown us there is not another individual currency that people are rallying around right now,” Campbell said. “Instead, you would look to gold and bitcoin as neutral assets, stores of value, the kinds of things that has been used for, for thousands of years. And in bitcoin’s case, aspirationaly, trying to be the digital version of gold.”
That’s why bitcoin has been volatile – moving up and down – but not making many big moves one way or the other, Campbell said.
While bitcoin has long had true believers, it has also had detractors who question its purpose. But Sigel told USA TODAY, “We’re very positive on bitcoin in the longer term. We see continued adoption.”
Since early 2024, exchange-traded funds have been able to hold bitcoin, rather than just futures contracts tied to its price. Many large firms now hold the cryptocurrency on their balance sheets, as well, Sigel noted. “We have high conviction that will continue.”
