The shifting association between Bitcoin and conventional financial markets is facing fresh strain as international investors abandon risk assets in light of escalating US trade conflicts.
Bitcoin (BTC) exchange-traded funds (ETFs) listed in the US experienced their fourth successive day of capital outflows on April 8, with over $326 million in net redemptions recorded across various products, based on findings from Farside Investors.
BlackRock’s iShares Bitcoin Trust ETF (IBIT) encountered the most significant sell-off, exceeding $252 million, marking its largest daily outflow since February 26.
Bitcoin ETF flows, US dollars, millions. Source: Farside Investors
The selling pressure follows US President Donald Trump’s April 2 declaration of extensive reciprocal import tariffs, which ignited a remarkable $5 trillion loss in the S&P 500 across two days.
Related: Bitcoin could compete with gold as an inflation hedge in the next decade — Adam Back
The postponement of turbulence in the crypto market following the tariff-induced sell-off in traditional markets underscores Bitcoin’s “developing relationship with traditional markets,” as noted by Lennix Lai, global chief commercial officer at OKX exchange.
Lai conveyed to Cointelegraph:
“While having fallen 26% since January’s inauguration, Bitcoin’s relative stability during the initial days post-tariff announcement — decreasing by 6% as opposed to Nasdaq’s 11% drop — indicates a complex dynamic forming between crypto and traditional assets.”
Initially, Bitcoin maintained its position above the $82,000 support level, but on Sunday, April 6, it swiftly dropped below $75,000.
BTC/USD, 1-year chart. Source: Cointelegraph Markets Pro
Some sector leaders attributed the sell-off on Sunday to Bitcoin’s 24/7 liquidity mechanics, which positioned BTC as the only major liquid asset available for de-risking during the weekend.
Related: Bitcoin price could reach $250K by 2025 if Fed transitions to QE: Arthur Hayes
Bitcoin remains connected to global liquidity conditions
Even though there are “promising signs” of a diminishing correlation between Bitcoin and equities, Bitcoin’s price pathway still correlates with global liquidity conditions, Lai stated, adding:
“While I observe early signals of divergence, I contend that Bitcoin remains intrinsically linked to global liquidity conditions, necessitating caution amid potential market upheavals — even as gold acts as a safeguard against geopolitical instability.”
“The most vital factor here is not merely price movement but Bitcoin’s increasing conceptual influence — individuals are progressively perceiving it as a legitimate strategic reserve asset for diversification amid chaotic traditional markets,” Lai continued.
Other analysts also recognize the rising money supply as the primary catalyst for Bitcoin.
“Bitcoin operates solely based on market expectations regarding future fiat supply,” noted Arthur Hayes, co-founder of BitMEX and chief investment officer of Maelstrom.
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