The roller coaster ride that is Bitcoin (BTCUSD) continues, with the core cryptocurrency giving up nearly 30% of its value from its all-time high of just over $109,000 on January 20 this year to below $80,000 on three separate occasions in that many months to have settled at around $100,000 the last couple of weeks. The wild ride is not completely unexpected, though, as it largely mirrors the huge ups and downs witnessed by the equity market over recent months following uncertainty around a global trade war. But things appear much better now, with the U.S. and China toning down the rhetoric and agreeing to sit at the negotiation table even as the U.S. inked a trade deal with the U.K. So it would look like the only way for the stock market and Bitcoin to move now is up.

Not so fast. While the trade deals are great news, one cannot overlook the U.S.’s growing debt burden and its potential impact on all asset classes. The equity market will bear the brunt of this the most (see S&P To Crash >50% With Debt Downgraded?). And Bitcoin – often dubbed “digital gold” – might not have it easy either. But going by how Bitcoin has fared during previous market crises, it looks like a promising alternative with the potential for higher returns at lower volatility than the equity market. And if you are looking for growth with reduced volatility, you might consider the High Quality portfolio, which has outperformed the S&P 500 and generated returns of over 91% since its inception

Bitcoin’s Resilience Shows During Market Crashes

A closer look at Bitcoin’s behavior during significant market downturns provides further insight:

• Inflation Shock (2022): The cryptocurrency saw a decline of over 70%, dropping from well above $60,000 to below $17,000. But since then, it has rallied 6x to over $100,000 now.
• Covid Pandemic (2020): Bitcoin’s value decreased by roughly 50%, but it quickly recovered

Analyzing Bitcoin’s historical performance reveals a pattern of resilience. Despite experiencing significant price drops, each subsequent low has been higher than the previous one. This trend suggests an overall upward trajectory, even amidst volatility.