Bitcoin (BTC at $64,168.87) may be entering a new period of outperformance against traditional assets. According to Risk Dimensions chief investment officer Mark Connors, persistent inflation and weakening bond markets are driving the shift.
142-Day Underperformance Ends
Connors, former global head of portfolio management at Credit Suisse, noted that Bitcoin recently broke out of its longest stretch of underperformance against the S&P 500 — a 142-day period ending 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."
Inflation and Bond Pressure Boost Bitcoin
Investors are grappling with stubborn inflation, rising oil prices and interest rate uncertainty. Connors argued that bonds, traditionally seen as defensive assets, are 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 to outperform both equities and fixed income as negative news and high oil prices persist.
Geopolitics and Energy Prices Play a Role
Connors tied the macro environment to geopolitical tensions and elevated energy prices. Oil has stayed structurally high this year, fueling inflation concerns and pushing markets toward technology and productivity gains as a counterweight. He highlighted the growing link between AI and blockchain as businesses seek decentralized systems for machine-driven transactions and automation. "The only way to punch through that inflationary pressure is through technology," Connors said.
Gold's Run Over, Bitcoin's Resurgence Begins
Connors also pointed to shifting investor preferences between gold and Bitcoin. In 2020, gold outperformed early in the pandemic before Bitcoin saw a strong comeback. "Gold has had its run," he said. "Bitcoin is now on its resurgence." The current environment mirrors that period, with Bitcoin poised to repeat its outperformance.