Bitcoin (BTC) Price Forecast: Can cryptocurrencies become a safe haven as the U.S. stock market plummets?

Since April 2, the "Liberation Day", the U.S. stock market has experienced unprecedented drastic fluctuations.

The US's aggressive trade policy caught Wall Street off guard, triggering panic selling and violent shocks last week. The Dow Jones Index plummeted 4,000 points in just 48 hours, setting an unprecedented record of falling more than 1,500 points on two consecutive days in history. Meanwhile, the S&P 500 fell 10.5%, and its market value evaporated by nearly $5 trillion.

False information and speculative market

Disinformation plays an important role in recent market fluctuations. For example, a Twitter account with about 1,000 followers claimed that the United States would suspend tariffs for 90 days, and was then forwarded by another account with about 800,000 followers, "Walter Bloomberg." This incident caused violent market fluctuations and stock prices soared, and it was not until the White House quickly refuted the rumors.

The current market is increasingly relying on pure speculation to evaluate the fundamentals of a company, and yesterday’s example shows that the market is extremely speculative, and is completely different from the traditional stock valuation model that relies on earnings reports and balance sheets, Wall Street is now completely dominated by sentiment.

Cryptocurrency: Safe-haven asset?

Although cryptocurrencies have also seen a decline, with Bitcoin falling nearly 12% since April 2, there are still people who believe that digital assets can serve as a tool to hedge financial risks in the coming months.

While cryptocurrencies played a role in hedging inflation during the COVID-19 pandemic, most digital assets were at historical highs at the time—the reliability of cryptocurrencies as a means of store of value remains to be tested, especially when compared to gold.

Bitcoin’s historical rebound

Despite the volatility, Bitcoin still shows a pattern of rebounding from major market crashes, usually faster than traditional assets. Since its inception, Bitcoin has experienced multiple crashes, sometimes losing more than 80% of its value, but ultimately hit new all-time highs. This resilience shows that it can withstand market turmoil.

Fixed supply and unlimited printing of money

One of the biggest advantages of Bitcoin is its fixed total of 21 million coins. By contrast, fiat currencies are controlled by central banks, which can print money without limit, which historically led to inflation and currency devaluation. As Fed Chairman Jerome Powell said, governments around the world are struggling to cope with growing inflation, and Bitcoin’s fixed supply and preset mechanisms make it a more attractive investment option.

Institutional adoption of credibility

One of the most powerful arguments for Bitcoin at present is the massive adoption of it by institutions in recent months. Under Michael Sailer's strategic leadership, global companies have been adding billions of dollars in Bitcoin to their reserves.

Not only companies, but hedge funds, financial institutions and even governments are turning to cryptocurrencies to protect their assets from economic instability. This further enhances the legitimacy of Bitcoin as a means of store of value, and may even become a safe-haven investment in the future like gold.

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