Investing.com -- Bitcoin has shown a noteworthy degree of resilience during the latest bout of market volatility, signaling a stronger capital base supporting the asset, according to Bernstein.
While previous crises, including the pandemic and rate shocks, triggered drawdowns of up to 70%, the current correction of 26% appears modest by comparison.
Gautam Chhugani, senior digital assets analyst at Bernstein, believes that this price stability suggests Bitcoin is now backed by more "resilient capital."
Institutional inflows through exchange-traded funds (ETFs) and corporate treasury strategies have helped transform Bitcoin’s investor base, reducing the historical reliance on retail flows.
“The ETF outflows still remain in positive territory at year-to-date (YTD) ~$770mn inflows,” Chhugani notes, even with Bitcoin down 15% over that period.
That compares to historical periods dominated by retail panic selling and heavily leveraged miner liquidations, during which the world’s leading cryptocurrency declined up to 70%.
Chhugani sees Bitcoin increasingly behaving like a “probabilistic ‘gold’,” calling it a higher-volatility and more liquid version of the precious metal.
Despite its continued correlation with tech stocks during risk-off events, Bitcoin’s role as a weekend barometer for risk appetite is also taking shape, acting as a leading indicator when traditional equity markets are closed.
“We believe, Bitcoin acts as the most accessible and liquid risk-market, when equity markets are shut down,” Chuggani said.
Miners, too, are playing a role in this more stable backdrop. Companies like Marathon (NASDAQ: MARA ), CleanSpark (NASDAQ: CLSK ), IREN Ltd (NASDAQ: IREN ) and Riot Platforms (NASDAQ: RIOT ) have grown their hash rates substantially through 2024 and into this year.
Meanwhile, miners have maintained “healthy balance sheets with low leverage,” and are under no immediate pressure to sell their Bitcoin holdings, further insulating the market from supply shocks.
The report highlights the impact of U.S. tariffs on Chinese mining hardware, which may hinder domestic hashrate expansion. However, it also points to diversification efforts by miners and new AI-focused deals as cushioning factors.
“AI offers upside and business model diversification to miners,” the analysts wrote, citing continued deal activity with firms like CoreWeave .
Investors are also watching whether CoreWeave Inc (NASDAQ: CRWV ) can broaden its customer base beyond Microsoft (NASDAQ: MSFT ) and if Core Scientific Inc (NASDAQ: CORZ ) can secure additional clients.
Despite ongoing AI developments, Core Scientific has seen the steepest YTD decline among covered miners, while Riot continues to advance its AI initiatives at its Corsicana site.