Bitcoin (BTC) Has Become the "Safe-Haven Coin" of the Crypto Market

Several stress points are converging: More speculative corners of the market, such as tokens used for Decentralized Physical Infrastructure Networks (DePINs), memecoins and coins used for Artificial Intelligence (AI) agents, have been hardest hit. Their underperformance highlights growing investor caution.

The cryptocurrency market has seen better days, with several stress points converging to keep upbeat traders at bay.

Most cryptocurrency tokens have struggled to maintain any upward momentum throughout 2024, especially after the cryptocurrency market experienced significant gains in the final months of 2023.

However, the speculative corners of the market, such as tokens used for Decentralized Physical Infrastructure Networks (DePINs), memecoins and coins used for Artificial Intelligence (AI) agents, have been hardest hit. Their underperformance highlights growing investor caution.

Kar Yong Ang, a financial market analyst at Octa broker, explains: ‘As of right now, the market clearly sees more value in Bitcoin vs the rest of the crypto universe. The global macroeconomic situation is highly unstable, with tariffs drama still unfolding and rising protectionism potentially threatening the U.S. dollar’s reserve currency status. As a result, investors’ capital has migrated from high-risk crypto space like alt-coins into relatively low-risk Bitcoin. In fact, Bitcoin has become a sort of “safe-haven coin” of the crypto market’.

Indeed, broader financial markets have become increasingly concerned about the deteriorating U.S. twin deficits (fiscal and trade), both of which are on an unsustainable trajectory. The yields on the U.S. 20-year government bonds rose above 5.15% on 22 May, almost a two-year high, while the U.S. Dollar Index (DXY) dropped below the critical 100 mark, reflecting eroding confidence in the USD’s safe-haven status. Furthermore, ratings agency Moody’s downgraded the U.S. sovereign rating, one notch down from ‘Aaa’ to ‘Aa1’ due to concerns about the nation’s growing debt.

Concurrently, most cryptocurrencies continue to act as high-beta proxies for global sentiment, and in today’s global macroeconomic environment, that sensitivity is proving to be a significant headwind. Tariff disputes between the U.S. and China, macroeconomic uncertainty, and declining equity market performance are all contributing to a reduction in overall risk appetite, thereby negatively impacting most cryptocurrencies. However, Bitcoin appears to be a major exception in this regard.

Kar Yong Ang explains: ‘At first, the BTC rally appeared to be highly speculative: the market had positively reacted to Trump’s softer stance towards the Federal Reserve (Fed) Chairman and U.S.-China trade deal. Later, however, Bitcoin became the only major crypto coin to set a new all-time high. It suggests a continuing flight to perceived safety within the crypto universe, while alt-coin flows remain diminished’.

Still, the ongoing macroeconomic uncertainty and potential failure of the U.S. to resolve its trade tensions with the European Union (EU) could act as an immediate catalyst, potentially triggering a renewed bearish phase for Bitcoin. Just recently, U.S. President Donald Trump’s threat to impose 50% tariffs on the EU triggered a classical risk-off move—a sell-off in BTCUSD and a rally in XAUUSD.

Traders and long-term investors should keep a close eye on:

* The U.S. 20-year government bond yields.

* The U.S. Dollar Index (DXY).

* The latest updates on the U.S. trade disputes with China and the EU.

Tactical patience will be essential this summer. Rushing in to buy Bitcoin now may be unwise, but carefully buying the dips is more reasonable. Key levels to watch are 105,000, 98,000, 94,000, 89,000, and 84,000.

Compliance reminder: trading Contracts for Difference (CFDs) carries a high level of risk and may not be suitable for all investors. Emotional trading can increase this risk. Always trade within your means and understand the risks involved.

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