There are 2 possible meanings of bitcoin's rise
Is bitcoin rising due to an improvement in sentiment in risk markets or as a refuge against economic uncertainty?
Scenario 1: bitcoin rises as a refuge against economic uncertainty
Bitcoin has several characteristics that make it attractive as a safe-haven asset. It is scarce, as its supply is limited to 21 million units. It is also resistant to censorship, does not rely on governments or central banks, and allows for global transfers without intermediaries. Additionally, its network and mining operate in a decentralized manner, making it harder to manipulate or disrupt.
These properties, amid its growing institutional and governmental interest as a store of value, are contributing to its perception as an alternative to gold in times of uncertainty.
"While it may still be premature to call bitcoin a full-fledged 'safe haven', its relatively moderate decline during recent global risk events suggests that it is increasingly perceived as a form of 'digital gold'," said Min Jung, an analyst at Presto Research.
For Jung, there is a revived interest in bitcoin as a possible hedge against inflation and geopolitical risk. This may explain why it is showing better performance than US stock markets.
Scenario 2: bitcoin rises due to improvement in sentiment in risk markets
In contrast to the first scenario, bitcoin's strength could be reflecting a relief from macroeconomic tensions. This comes amid the de-escalation of the trade war, the reduction of inflation in the United States for the second consecutive month, and Trump's interest in lowering interest rates.
Bonus track: what if both scenarios are happening at the same time?
It is possible that both scenario 1 and 2 are happening simultaneously. In other words, bitcoin seems to gain demand both as a long-term safe haven against global uncertainty and in light of the possibility of regaining an upward trend with an improvement in the risk market environment.$BTC