Bitcoin is leaving the traditional associations it had with traditional stock markets behind, a latest Citigroup analysis suggests. The virtual currency displayed uncharacteristic stability in latest episodes of financial shock, making experts reconsider incorporating it into investor portfolios.

Bitcoin Performs Better Than Major Stock Indexes Amid Uncertainty

has outperformed both the S&P and EuroStoxx indexes on a volatility-adjusted basis, as reported by Citigroup analysts. Matthew Sigel, head of Digital Assets Research at VanEck, emphasized the report’s conclusions regarding Bitcoin’s consistent performance throughout major market events. The digital currency has outperformed price expectations derived from macroeconomic variables by more than 10% since the beginning of March, indicating what could be a risk premium independent of normal market forces.

“Bitcoin’s performance during certain financial-stress periods – ie, SVB turmoil, Sept 23 US bond term-premium rise, and recent market volatility – warrants attention as a potential indicator of its maturing adoption and purpose as an asset class.” – Citi — matthew sigel, recovering CFA (@matthew_sigel)

Crisis Response Exposes Shift Pattern For Cryptocurrency

As Silicon Valley Bank failed in March of 2023, Bitcoin prices remained above $21,000 and closed the month rising above $28,000 during the time. All of this was while traditional investments plummeted. Later, in September of 2023, when US bond term premiums were increasing, Bitcoin opened at near $25,000 and closed just above $26,000. These instances demonstrate how Bitcoin can remain stable when financial markets become turbulent.

BTCUSD trading in the $94,680 region on the 24-hour chart: 

Most recently, US President Donald announcements have triggered market volatility that temporarily took Bitcoin below $75,000. The digital currency rebounded swiftly, though, rising again above $90,000 and beating out old-school stocks. Bitcoin is still the best-performing asset since the November US election despite recent market volatility.

Bitcoin ETF Money Flows Remain Strong Despite Market Jitters

As per the Citigroup report, funds entering have remained steady, while investors are pulling out of Ethereum ETFs. CryptoQuant explained that institutional players, not retail buyers, appear to be behind Bitcoin’s increasing prices. The analysts cited ETF flows and interest in futures markets as key drivers of recent price action.

Image: Getty Images

Mixed Signals From Market As Bitcoin Matures

Both on-chain and off-chain indicators paint a mixed picture of Bitcoin’s situation. Citigroup states that the overall stablecoin value continues to rise solidly, even during turbulent times. Ethereum’s main chain usage has increased; however, activity is waning on Layer 2 leverage. The same goes for activity on the Bitcoin network: intermittent burst activity. Some analysts believe these factors indicate that Bitcoin is forming its individual market behavior, partially influenced by a recovering gold market and a weakening US dollar. Investor dollars into the Bitcoin ETF have remained steady throughout downturns, leading some to speculate that institutional investors are developing a different view of the than they have held historically.

Featured image by Håkan Dahlström via CC BY 2.0, chart from TradingView