Grayscale Investments has released a report that is reshaping perceptions of Bitcoin's market behavior. The analysis indicates that since early 2024, Bitcoin's price movements have closely tracked software and growth stocks rather than traditional safe-haven assets like gold. This correlation was notably evident when fears around the AI sector triggered a sell-off, causing Bitcoin to crash alongside tech stocks.
Bitcoin is currently down approximately 50% from its October highs, a period during which gold has reached record prices. This divergence challenges the narrative of Bitcoin as a digital safe haven. However, Grayscale's Head of Research, Zach Pandl, maintains a long-term bullish view, citing Bitcoin's fixed supply and independence from central bank policies as foundational store-of-value characteristics.
The report contextualizes Bitcoin's 15-year history against gold's millennia, noting that during the 2020 COVID crash, Bitcoin initially fell but then dramatically outperformed all major assets following unprecedented monetary stimulus. Similarly, during the 2023 Silicon Valley Bank collapse, Bitcoin rallied as trust in traditional finance wavered. Grayscale suggests the current growth-stock correlation stems from Bitcoin still being in a price-discovery phase, heavily influenced by institutional capital flows.
Concurrently, market analysts are watching key technical levels. Bitcoin has recently broken out of a tight falling channel and is consolidating above the $64,000 support level, which is now seen as a critical floor. A break below could see a retest of $60,000, while a clean break above $71,000 resistance could open a path toward $80,000.
Amid this uncertainty, BlockTower Capital founder Ari Paul presented a bifurcated outlook for the crypto market. He outlined two potential scenarios: one where the market peak for this generation of crypto assets is already in, citing slow real-world adoption and mixed results from initiatives like El Salvador's Bitcoin experiment. The other scenario posits the current downturn as a macro-driven correction within a larger bull trend, with improving fundamentals and purged leverage setting the stage for a renewed rally driven by capital flows.
Paul warns of a risk of a deeper crash, with Bitcoin potentially falling to the $15,000–$40,000 range before any sustained recovery. He is currently long but plans to reassess around the $90,000 level. He also expressed concern about Bitcoin's long-term sustainability if prices stagnate, as diminishing block rewards could pressure network security and strain the revenue models of exchanges and custodians.
