- Bitcoin is raising mixed feelings among traders as its price trends range between $70,000 and $71,000.
- Skeptics argue that Bitcoin is unsuitable to even come close to traditional asset classes.
Despite a brief decline, Bitcoin remains [BTC] has risen again to $71,000, exceeding pre-halving expectations. Yet despite this increased demand, Bitcoin skeptics remain strong in their criticism, often comparing its value to traditional asset classes.
This raises a crucial question: how is Bitcoin evaluated and understood in the broader financial landscape?
Bitcoin’s resilience amid growing skepticism
Yassine Elmandjra, Director of Digital Assets at Ark Invest, weighed in on the ongoing debate in a recent conversation at Bitcoin Investors Day in New York. He emphasized that the lack of returns Bitcoin generates, unlike bonds, poses a challenge in evaluating it. He said,
“I think a lot of Bitcoin’s skepticism comes from its inability to fit neatly within traditional asset class frameworks, especially from a fundamental valuation perspective.”
Separately, Chris Kuiper, director of research at Fidelity Digital Assets, said: highlights that Bitcoin price movements closely track changes in inflation expectations, especially when measured over a five-year horizon. He said,
“If your inflation expectation goes from 3% per year to 6%, that’s a huge change and Bitcoin has tracked that perfectly during COVID and post-COVID, with all the money creation.”
Regarding comments that Bitcoin is not an inflation hedge, Kuiper exclaimed:
“I think that it!”
This sentiment was further confirmed by the Woodbull Charts which highlighted the decline in Bitcoin’s own inflation from 3.72% in 2020 to 1.7% in 2024.
However, when we examine Bitcoin’s 1-year volatility chart alongside other asset classes, a stark contrast emerges. Bitcoin’s volatility stands out at 46.95%, while gold shows significantly lower volatility at only 5.6%.
This comparison highlights the remarkable difference in price movements between Bitcoin and gold over the past year.
In response, VanEck’s Matthew Siegel noted that Bitcoin’s effectiveness as an inflation hedge may have been affected by recent policy decisions, causing a temporary setback. He noticed,
“We always have to remind ourselves that this is an emerging market asset, a frontier market asset. Americans love it because we can easily speculate with our ETFs”
What lies ahead?
With the uncertainty surrounding whether the upcoming Bitcoin halving event will have a similar effect on the price as the previous one. Kuiper acknowledged that the halving coincides with election cycles and liquidity cycles. This indicates that several factors can influence price development.
So despite the lack of a clear comparison to the past, experts believe the halving is likely to dampen some aspects of price volatility.