bitcoin may be entering a new period of outperformance against traditional assets as inflation pressures persist and bond markets weaken, according to Mark Connors, chief investment officer at Risk Dimensions.
Connors, who spent years as global head of portfolio management at Credit Suisse, said Bitcoin recently emerged from what had been its longest period of underperformance against the S&P 500 in history, a 142-day period that ended in early May.
“I think Bitcoin’s underperformance against the markets is over,” Connors said in an interview. “It is in the consolidation phase [that] “It has moved into a phase of superior performance.”
The change comes as investors face persistent inflation, rising oil prices and uncertainty around interest rates. Connors argued that bonds, traditionally considered defensive assets, are increasingly under pressure as markets adjust to a “higher for longer” interest rate environment.
“Bitcoin, as it always does, struggles early, but then always comes out first,” he said, adding that bitcoin could continue to outperform both stocks and fixed income “as we go through the bad news strait and oil is persistently high.”
Connors linked much of the current macroeconomic environment to persistent geopolitical tensions and elevated energy prices. Oil has remained structurally high this year, he said, fueling concerns about inflation and forcing markets to look toward technology and productivity gains as a counterbalance.
He argued that AI and blockchain are increasingly linked as companies look to decentralized systems to support machine-driven transactions and automation.
“The only way to overcome that inflationary pressure is through technology,” Connors said.
He also noted the shift in investor preferences between gold and bitcoin. Connors compared the current environment to that of 2020, when gold initially outperformed during the early stages of the pandemic before bitcoin began a strong resurgence.
“Gold has had its streak,” he said. “Bitcoin is now in its resurgence.”
