Bitcoin Outshines Stock Markets in Risk-Adjusted Terms as Fiat Strains Show

Despite suffering a near 30% drop from its peak, Bitcoin (BTC) is outperforming traditional markets like the S&P 500 when adjusted for volatility, sparking renewed debate over the cryptocurrency’s role as a systemic hedge.

Market analysts, led by Bloomberg’s Jamie Coutts, say BTC’s behaviour may not just be a sign of endurance but a signal of deeper cracks in the global financial system.

Bitcoin’s Bear Market Resilience

Coutts reignited the conversation, highlighting Bitcoin’s risk-adjusted outperformance despite recent fluctuations in global markets shooting through the roof as a result of a Donald Trump-instigated tariff standoff. Even while trading at 2.5x the volatility of the S&P 500, BTC’s drawdown was only marginally worse, a trend the market strategist notes has persisted since 2022. 

His analysis builds on a 2023 thread where he dissected Bitcoin’s Sortino ratio, a risk-adjusted performance metric that showed the number one cryptocurrency consistently topping traditional assets like equities, bonds, and gold across several market cycles.

Coutt’s thesis hinges on a broader narrative: Bitcoin’s fixed supply and decentralized nature make it a hedge against the “entropy” of fiat-driven markets. “What is happening right now is epic. Things are breaking,” he tweeted on April 9, suggesting that nation-states may soon recognize Bitcoin as a “global settlement layer” as trust in traditional finance erodes.

His 2023 analysis modeled the impact of reallocating just 1% of a traditional 60/40 bond-equity portfolio into Bitcoin. The backtest, running from 2015 to 2022, showed improved returns, even though it still trailed monetary debasement. According to him, this meant even modest BTC allocations could boost long-term portfolio durability.

Critics have, however, cautioned against extrapolating Bitcoin’s short history too much, pointing to its liquidity constraints. Coutts also concedes, advising “smaller [portfolio] positions, rebalanced less frequently.”

Volatility Persists

Despite the bullish long-term view, BTC’s short-term behavior is still volatile. Following the release of the U.S. Consumer Price Index (CPI) data for March, showing inflation cooled more than expected, the asset initially went against expectation, retreating from $82,500 to around $78,600 per data from CoinGecko.

Currently, it sits at $82,000, down about 0.3% in the last 24 hours but still up almost 15% year-on-year. Additionally, its 2% dip over seven days means it is outperforming the broader crypto market, which has shed 4.4%.