While some policymakers have described Bitcoin as a store of value, its recent price action seems to suggest it’s being treated more like a high-beta tech stock.
Despite numerous opinion leaders, including Federal Reserve Chair Jerome Powell, describing Bitcoin (BTC) as a safe haven asset and a potential alternative to gold, its recent price behavior has led some to compare it to tech stocks, analysts at Swiss crypto bank Sygnum suggested in a recent market outlook report.
However, Bitcoin’s price is primarily driven by its perception as a store-of-value asset, not from tech-related applications on its network, the analysts note.
“In reality, Bitcoin is mostly not a tech play as only a small fraction of its value is derived from applications and other related activity on the network, while most of its value hinges on it being accepted as a store of value asset.”
Sygnum
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It has long been assumed that Bitcoin would be traded as a gold proxy, while Ethereum (ETH) would serve as the crypto market proxy, given its significant market share in blockchain applications. However, Bitcoin is increasingly being seen as the de facto crypto market proxy, which impacts its price behavior, Sygnum notes. As the analysts say, this impact is evident in the weak adoption of spot Ethereum exchange-traded funds, with many new investors concluding that holding Bitcoin is enough exposure to the crypto sector.
“This is also evidenced by the poor adoption of the Ethereum ETFs — new investors for now conclude that a Bitcoin holding is sufficient to have exposure to the crypto market.”
Sygnum
The analysts caution that this trend could hinder Bitcoin’s progress as a reserve asset if it continues to behave like “the Nasdaq on steroids.” Addressing Bitcoin’s future, the Swiss crypto bank says the cryptocurrency’s role could depend largely on actions from the U.S. administration, which may influence whether Bitcoin is viewed as “digital gold” or a crypto market proxy.
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