Bitcoin prices uncoupled from stocks in the last two weeks as concerns of U.S. economic stability and global trade wars weigh heavily on investors. The world’s largest cryptocurrency may warrant greater consideration this year should it provide increasingly noncorrelated performance to stocks.
The price of bitcoin (BTC) touched above $88,000 in trading on Monday, April 21, according to WSJ data. The move followed on the heels of escalating investor concerns about increased threats by the current administration to fire Federal Reserve Chair Jerome Powell. Markets, already reeling under new, aggressive, and tumultuous U.S. tariff policies, slid further on Monday. The S&P 500 was down 3.25% while the Nasdaq plummeted 3.49% as of midafternoon trading.
As stocks fell on Monday, the dollar hit a new three-year low. The DXY (ICE U.S. Dollar Index) fell to $97.92 early Monday morning after peaking near $110 in January according to MarketWatch data. A number of factors could be behind the dollar’s weakening since January. A strong shift to safe-haven assets that exclude U.S. exposures, flight from bonds by foreign holders, and concerns surrounding a new global trade regime could all play a role in U.S. dollar devaluation. Whatever the reason, they reflect waning confidence in the U.S.
At the same time that stocks fell and the dollar devalued, both gold and bitcoin gained. Markets have largely plummeted since the onset of tariffs in April, while gold continues to break record highs. BTC, though volatile, made net gains since April 9. The cryptocurrency has maintained strong correlations to equities in recent years, but brewing global trade wars could cause further decoupling.
Should the dollar continue to devalue, safe havens and alternatives could see greater investor demand. Bitcoin may prove an increasingly attractive inflation hedge and potential haven if its correlations to stocks continue to decline. In such an environment, the CoinShares Valkyrie Bitcoin Fund (BRRR ) is worth consideration.
The fund provides exposure to bitcoin’s price movements with the ease of access through traditional brokerages. Through BRRR, investors can capture bitcoin price movements while avoiding many of the extra steps required with direct bitcoin investment, such as storage.
BRRR seeks to reflect the price performance of the CME CF Bitcoin Reference Rate – New York Variant, minus fees and expenses. This index uses the same six bitcoin exchanges as the CME CF Bitcoin Reference Rate, but calculates bitcoin’s price at New York Market close (4 p.m. ET).
The fund is a trust that passively holds bitcoin (meaning it’s physically backed). Shares held are tied to the value of the bitcoin held. It also is not an investment company, and therefore does not fall under the 1940 Act. The bitcoin held is custodied by Coinbase, BitGo, and Komainu, with private keys kept in cold storage. In other words, the means to access the bitcoin held by the custodians remains offline, disconnected from the internet. This provides an extra layer of protection from hacking.
BRRR carries management fees of 0.25%.
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