A roughly 5% down day in bitcoin rarely makes me feel better, but yesterday's relative performance was encouraging. Using Coinbase prices around the US stock-market close on Wednesday and Thursday, bitcoin fell from about $80,044 to $76,085, a decline of 4.95%. Compare that with 5.52% for the Nasdaq Composite and 4.36% for the S&P 500. Bitcoin moved roughly one-for-one with equities during a very nasty session. It held up better than the Nasdaq and a little worse than the S&P. Given how accustomed we have become to bitcoin amplifying a stock-market selloff, I will take that.
There was plenty of opportunity for it to do much worse. More than $1 billion of leveraged crypto positions were liquidated over the preceding 24 hours, according to CoinGlass data cited in the article. Semiconductor stocks plunged roughly 12%, and some companies caught between bitcoin mining and the AI infrastructure trade fell even harder. Bitcoin itself absorbed the selling without delivering the kind of disproportionate collapse I would have feared in that environment. A single trading day gives us a useful observation, and yesterday's observation was encouraging.
Increasingly, I think we have seen the bottom, and the next major move will be higher alongside liquidity. The same AI spending dependence that frightened the market yesterday is what I expect to force further fiscal support and eventual monetary accommodation. Investors are marking down the beneficiaries of the buildout today. At some point, I expect them to start marking up the assets that benefit from the money required to carry it forward. Bitcoin is at the top of that list for me.
The timing can still be painful. Inflation and higher interest rates can keep liquidity tight longer than investors want, and another forced liquidation can always send the price lower first. I am comfortable with that risk as a long-term saver. My conviction comes from the incentives facing policymakers and the fixed supply of the asset I own. Every round of trying to spend our way out of the consequences of the last round makes that combination more compelling.