Bitcoin (BTC) Emerges as the Clear Outperformer Among Major Asset Classes in April

April was a crucial month for the major asset classes, and turbulent early-month trading saw Bitcoin emerge as the clear outperformer.

Data from the past 30 days show that not only did Bitcoin bounce back strongly after a sharp drop in the first week of April, but by month’s end it had also dramatically outpaced both gold and the S&P 500. Bitcoin’s emergence as the top performer is another way of saying that it is developing into a high-beta asset—which means it swings a lot in price compared to other investments but offers potential for much greater upside.

As an increasing number of investors begin to treat Bitcoin as a serious portfolio component rather than a speculative anomaly, its price behavior is starting to reflect something far more pedestrian: the generally positive or negative vibe coming from the broader economy. And the vibe from April’s data is anything but subtle. The correlation between Bitcoin and traditional equities—especially the S&P 500—is becoming much stronger. Indeed, in the realm of portfolio theory, Bitcoin is not so much the unusual equity it used to be thought of as, but more a potential risk factor common to a wide variety of assets.

Major Asset Classes Performance In April

[Chart of major asset classes performance in April]

A Volatile Start, a Strong Finish

At the start of April, Bitcoin was under pressure. Price levels were moving lower due to profit-taking and the general risk-off sentiment proliferating across the financial markets. But this dip was short-lived. In the following weeks, Bitcoin staged a dramatic comeback, moving almost in lock-step with the upward-moving S&P 500. By the end of April, Bitcoin had not only recouped its early losses but also had moved into positive territory, delivering a gain that exceeded gold and came within spitting distance of the benchmark U.S. stock index.

Traditionally seen as a secure asset during times of economic instability, gold experienced only slight fluctuations during the month. While it edged upward, providing some modest gains, it failed to keep up with Bitcoin’s recovery. The S&P 500, meanwhile, enjoyed a nearly flawless month, finding support from both strong corporate earnings and investor optimism regarding the Federal Reserve’s future policy moves.

The ability of Bitcoin to bounce back from short-term volatility and beat not just gold but also stocks speaks volumes about its nascent status in the global financial system. For investors, it ain’t yet a signal that the asset can ride market chop and come out whole but, rather, a sign that this is probably the next great monetary base.

Correlation With the S&P 500 Reaches New Highs

April’s market data offers one of the most striking observations: the correlation between Bitcoin and the S&P 500 is increasing. Analysts have observed that the path Bitcoin takes now often mirrors that of major stock indices. This is especially true when we consider the current state of the global macro economy. In April, for instance, the S&P 500 rose and subsequently fell in about the same time frame as Bitcoin. This solidifies the idea that, in terms of the apparent movement to either side of a mean average price, Bitcoin is behaving more like a high-beta stock than an uncorrelated asset.

Although the S&P 500 finished the month marginally better than Bitcoin, the two were closely aligned. The close tracking implies that Bitcoin is now a market player, not isolated in a realm of its own. Like any public asset, it now responds to the same stimuli as the traditional market—interest rate expectations, inflation data, and general investor sentiment.

This increasing correlation could undermine the story of Bitcoin as a “hedge” against traditional financial markets. Instead, it makes Bitcoin a risk-on asset—one that provides even more amplified exposure to the trends driving the stock market—because in both cases, we have investors trying to juice their returns.

Bitcoin Offers Higher Alpha With Familiar Risks

Despite being so volatile, Bitcoin is still an alluring prospect because it has the potential to produce a high alpha. An alpha, of course, is the fancy term for investment performance that exceeds a market benchmark. April’s price action for Bitcoin reinforced this.

While the S&P