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Bitcoin is ready to beat stocks and bonds again after underperformance against Wall Street
TL;DR
Bitcoin may be poised for outperformance against stocks and bonds as inflation persists and bond markets weaken, according to Mark Connors. After a historic 142-day underperformance against the S&P 500, bitcoin is now in a consolidation phase shifting towards outperformance.
Key points
- Bitcoin may outperform traditional assets again.
- Mark Connors highlights a shift after 142 days of underperformance.
- Bonds are facing pressure from a higher interest rate environment.
Mentioned in this story
Credit Suisse
Bitcoin BTC$75,876.99 may be entering a new period of outperformance against traditional assets as inflation pressures persist and bond markets weaken, according to Risk Dimensions chief investment officer Mark Connors.
Connors, who spent years as the global head of portfolio management at Credit Suisse, said bitcoin recently broke out of what had been its longest stretch of underperformance against the S&P 500 in history, a 142-day period that ended in early May.
“I think bitcoin’s underperformance versus markets is over,” Connors said in an interview. “It’s in the consolidation phase [that] has shifted into an outperformance phase.”
The shift comes as investors grapple with stubborn inflation, rising oil prices and uncertainty around interest rates. Connors argued that bonds, traditionally viewed as defensive assets, are increasingly under pressure as markets adjust to a “higher-for-longer” rate environment.
“Bitcoin, as it always does, takes it on the chin early, but then it always comes out first,” he said, adding that bitcoin could continue outperforming both equities and fixed income “as we grind through the straits of poor news and oil persistently being high.”
Connors tied much of the current macro environment to persistent geopolitical tensions and elevated energy prices. Oil has remained structurally high this year, he said, fueling inflation concerns while forcing markets to look toward technology and productivity gains as a counterweight.
He argued that AI and blockchain are becoming increasingly linked as businesses look for decentralized systems to support machine-driven transactions and automation.
“The only way to punch through that inflationary pressure is through technology,” Connors said.
He also pointed to shifting investor preferences between gold and bitcoin. Connors compared the current environment to 2020, when gold initially outperformed during the early stages of the pandemic before bitcoin began a strong resurgence.
“Gold has had its run,” he said. “Bitcoin is now on its resurgence.”
Q&A
What did Mark Connors say about Bitcoin's performance against the S&P 500?
Mark Connors stated that Bitcoin recently broke its longest stretch of underperformance against the S&P 500, which lasted 142 days, and is now shifting into an outperformance phase.
Why are bonds under pressure in the current market environment?
Bonds are under pressure due to a 'higher-for-longer' interest rate environment, which is causing traditional defensive assets to struggle as inflation and oil prices rise.
What factors are contributing to Bitcoin's potential outperformance?
Bitcoin's potential outperformance is attributed to persistent inflation pressures, rising oil prices, and uncertainty around interest rates affecting traditional assets.
