Bitcoin (BTC) Is Gaining Renewed Attention as a Hedge Against Financial Instability

Bitcoin is gaining renewed attention as a hedge against financial instability after holding relatively steady during a record-breaking stock market downturn that saw $5 trillion wiped from the S&P 500.

The S&P 500 posted a $5 trillion loss in market capitalization over two days, its largest drop on record, according to an April 5 report by Reuters.

The record sell-off follows US President Donald Trump’s announcement of reciprocal import tariffs on April 2. The measures aim to shrink the country’s estimated trade deficit of $1.2 trillion in goods and boost domestic manufacturing.

S&P 500 record $5.4 trillion loss. Source: Zerohedge

Bitcoin’s (BTC) dip after the tariff announcement was significantly smaller than traditional markets, bodes well for Bitcoin’s growing maturity as a global asset.

“What we’re potentially witnessing is an evolution in Bitcoin’s market positioning,” Marcin Kazmierczak, co-founder and chief operating officer at RedStone blockchain oracle firm, told Cointelegraph.

“Bitcoin’s fixed supply architecture inherently contrasts with fiat currencies that may face inflationary pressure under tariff-driven economic changes,” he added.

Related: 70% chance of crypto bottoming before June amid trade fears: Nansen

While stocks plummeted, Bitcoin dipped just 3.7% over the same two-day period, trading at around $83,600 on April 5, according to TradingView data.

BTC/USD, 1-hour chart. Source: Cointelegraph/TradingView

Despite the $5 trillion sell-off in traditional markets, “BTC shows its worth, staying above its $82,000 key support level — a sign that structural demand remains intact even amid forced selling and elevated volatility,” Nexo dispatch analyst Iliya Kalchev told Cointelegraph.

Related: Michael Saylor’s Strategy buys Bitcoin dip with $1.9B purchase

Bitcoin may emerge as ‘digital gold’ amid Trump tariff talks

Despite Bitcoin’s decoupling from traditional stocks, its initial plunge in price signals that some investors still see Bitcoin as a risk asset, according to James Wo, the founder and CEO of venture capital firm DFG.

“With Bitcoin ETFs enabling greater institutional exposure, it is now even more influenced by macroeconomic trends,” Wo told Cointelegraph, adding:

Despite the current lack of momentum, analysts are confident in Bitcoin’s upside potential for the rest of 2025.

BTC projected to reach $132,000 based on M2 money supply growth. Source: Jamie Coutts

The growing money supply could push Bitcoin’s price above $132,000 before the end of 2025, according to estimates from Jamie Coutts, chief crypto analyst at Real Vision.