The announcement of Donald Trump’s poorly named reciprocal tariffs has in recent weeks set off a period of extreme volatility in global markets. Wall Street closed last week having lost more than 10% in two days. On Wednesday, the official announcement of a 90-day tariff pause sparked stock market euphoria, with double-digit rebounds on the Nasdaq (12.6%). While the stock market suffered constant large fluctuations, its most volatile asset par excellence, bitcoin, registered fewer trades. Despite so much disruption, it has remained stagnant, holding steady in recent weeks, and is now trading at $81,000.

The slightest oscillations of the pioneering cryptocurrency are noteworthy, it being an asset that historically has correlated closely with U.S. indexes, particularly the Nasdaq. “Normally, it had a multiplier effect of two or three; in 2020 and 2021, when the stock market fell by 10%, bitcoin tended to do much worse, falling by between 25% and 30%. And the behavior of the altcoins was even more exaggerated, with falls of 40% to 50%,” explains Javier Pastor, Bit2Me’s training director.

In the first week of November, which coincided with Trump’s election victory, bitcoin shot up 15.6% against the Nasdaq, with the pioneering cryptocurrency advancing by 7.94%. “In the early years, it had even bigger movements,” says Pastor. On November 11, 2024, when it exceeded $86,000 for the first time in history, bitcoin rose by 11.52%.

Analysts consulted agree that the correlation between these assets has changed over time, primarily due to the change in their user profile. Javier Molina, an analyst at eToro, points out that long-term investors, who hold bitcoin in their portfolios for more than a year and who represent 72% of all those investing in the asset, are not getting rid of their positions. Those who are selling are savers who bought more in the short term and are now trading.

“There have also been many liquidations, but with a lower volume than in previous sharp falls. The market seems to have less appetite and there is a rotation of investors: now the short-term speculator is not in bitcoin, but in Tesla. That is why volumes have risen sharply on the Nasdaq, while bitcoin is left waiting around,” Molina says.

Pastor agrees with this assessment, and pegs the beginning of the trend to the approval of bitcoin ETFs and the increased interest of institutional investors, typified by the purchases of companies like Strategy, governments (like that of El Salvador), and large investors like BlackRock and Fidelity. “The market seems more mature and legitimate,” he says.

Javier Cabrera, a market analyst, points to another factor: tariffs fall mainly on companies, rather than on cryptocurrencies. Bitcoin has no major event hanging over its head, while for U.S. companies, there is still great uncertainty, hence that market’s more abrupt movements. Molina agrees with this reading and points out that while bitcoin maintains its behavior, the volatility of other assets has increased.

“Right now Tesla, Apple and Google are showing more volatility than bitcoin, because that’s where the tariffs have a direct impact,” Molina says. In the case of the bitcoin industry, there are no direct consequences — apart from those on bitcoin mining, whose companies have supply chains in Asian countries subject to tariffs — while other U.S. companies do suffer from levies on their business and the macroeconomic ramifications they bring.

There has also been some recent good news for the cryptocurrency sector, such as the SEC’s dismissal of lawsuits against crypto companies, the confirmation of Paul Atkins as chairman of the agency and the letter to investors from Larry Fink, CEO of BlackRock, who warned of the possibility that investors may begin to see bitcoin as a safter bet than the dollar. Such developments have also supported the asset’s price.

In the short term, experts make clear, volatility is to be expected. However, if tariffs lead to a recession and force governments to launch economic stimulus measures, it would increase liquidity, a factor that benefits bitcoin. “More than with the Nasdaq, bitcoin now has more of a relationship with liquidity and has a time lag of approximately 60 days. That means that it reacts after the fact to increase (or reduction) in global liquidity,” says Pastor.

Faced with an increase in global liquidity, investors tend to invest in different types of assets, such as the stock market, gold, and bitcoin. “And bitcoin captures liquidity very well,” Pastor adds.

But in the medium term they have different views. Manuel Villegas, an analyst at Julius Baer, considers bitcoin unlikely to be recession-proof. “The only certainty is volatility,” he asserts. Instead, escalating tensions and a more aggressive trade war between the U.S. and China could benefit bitcoin, according to Pastor.

If China has to remain competitive, exporting its products to other markets or to the U.S. with tariffs of more than 100%, it will most likely devalue the yuan. “Chinese citizens are going to try to seek refuge in alternatives such as gold. Bitcoin would be another option. We already saw that with the tariff war of 2017-2018, when it absorbed a lot of the positions that Chinese citizens wanted to hold in reserve assets. And that explains the rally that year. If the trade war continues, we’re going to see a second derivative, which is a currency war. The yuan is going to depreciate, China is going to try to impose capital controls, and the Chinese are going to try to take refuge in gold and bitcoin. And that could be another element to favor the de-correlation of the traditional market with reserve assets such as bitcoin,” Pastor concludes.

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