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Bitcoin Holds Firm: A Non-Sovereign Hedge Amid Tariff Turmoil
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While President Trump’s tariff announcements have reignited volatility across financial markets, bitcoin has been notably resilient, outpacing both gold and tech stocks in April. This performance has renewed debate over Bitcoin’s evolving role as a hedge amid rising macroeconomic instability and geopolitical risk.
Since April 2, when President Trump announced his Liberation Day tariffs, the Nasdaq Composite has been flat since dipping earlier in the month and the Bloomberg Dollar Index has dropped nearly 4%. Gold, the traditional safe-haven asset, spiked to a record $3,500/oz before retreating, ending April with a 5.75% gain.
Bitcoin, meanwhile, rose about 11% over the same period, underscoring the growing appeal of decentralized assets in an environment characterized by increasing skepticism toward U.S. fiscal policy and central bank independence. In the thick of the tariff turmoil, Bitcoin’s realized volatility over the past 10 trading sessions has dropped to 43.86, notably below the S&P 500’s 47.29 and the Nasdaq 100’s 51.26—an unusual positioning for a digital asset traditionally known for its outsized volatility.
This relative calm marks a meaningful departure from historical norms. Bitcoin has often moved more dramatically alongside equities, reacting sharply to both risk-on and risk-off environments. But unlike major corporations represented in equity indices, bitcoin and other digital assets are largely structurally insulated from direct tariff impacts and trade policy changes. This makes them increasingly relevant in portfolios seeking exposure uncorrelated to policy-sensitive sectors.
While Bitcoin’s 30-day correlations to S&P & Nasdaq remain elevated at ~0.62 to S&P and ~0.64 to Nasdaq, its beta has declined during recent stress periods. This suggests that investors are beginning to treat the asset less as a speculative vehicle and more as a strategic, long-duration allocation. The shift is particularly evident when looking at fund flows. U.S.-listed spot Bitcoin ETFs saw $2.9 billion of net inflows in April, a sharp reversal from about $4.4 billion in outflows across February and March.
This structural rotation reflects a broader recalibration. Currently, investors are no longer just focused on inflation or near-term growth risks. They are increasingly hedging against systemic concerns—ranging from political interference in the Federal Reserve to the long-term sustainability of U.S. fiscal policy. In that context, Bitcoin’s decentralized, censorship-resistant, and non-sovereign characteristics become particularly relevant.
“Bitcoin as a non-sovereign asset means an investor doesn’t need the full faith or tax basis of a nation to support the integrity of the asset.”
— Chris Rhine, Head of Liquid Active Strategies
This behavior isn’t unprecedented. During the 2018–2019 U.S.–China trade standoff, Bitcoin rallied from around $3,500 to $13,000, mirroring yuan devaluation fears, inverted yield curves, and broader macro dislocation. Today, with rising long-end Treasury yields and heightened global policy uncertainty, that dynamic appears to be resurfacing again.
Recent positioning among counterparties interacting with Galaxy’s OTC spot and derivative trading desk reflects a market that is tactically cautious but structurally constructive—with disciplined leverage, low hedging stress, and continued engagement from both crypto-native and traditional institutions.
Furthermore, this growing demand from institutional investors—fueled by the launch of spot ETFs in January 2024, corporate balance sheet allocations, and potential government reserves—is unfolding against a backdrop of constrained supply, with 95% of Bitcoin’s total supply already mined in previous halving cycles.
“Bitcoin’s supply and demand dynamics are solidifying its place as a mature digital store of value.”
— Ian Kolman, Director & Co-Portfolio Manager
Ultimately, Bitcoin’s April performance may be more than just a reaction to policy headlines. It may represent a growing recognition that digital assets are not just speculative tools, but foundational components of portfolios navigating a new macro regime.
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