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Dave Portnoy, the controversial founder of Barstool Sports, recently posed a thought-provoking question on X that reverberated through the cryptocurrency community: “If the purpose of Bitcoin is to operate independently of the U.S. Dollar and evade regulation, why does it seem to trade in lockstep with the U.S. stock market?”
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This inquiry encapsulated the sentiments many casual investors have been grappling with, particularly following a drop in Bitcoin and crypto stocks prompted by new tariffs announced by President Donald Trump.
Prior to Trump’s announcement, Bitcoin was trading around $88,000. However, shortly after the tariffs were revealed, it plummeted below $83,000. The decline wasn’t isolated; the stock market also saw significant losses, particularly in tech-focused ETFs like Invesco QQQ (NASDAQ:QQQ), which dipped by 4% in after-hours trading.
Cryptocurrency-associated stocks reflected the downturn as well. MicroStrategy (NASDAQ:MSTR) saw a 7% decrease, while Coinbase (NASDAQ:COIN) and Robinhood (NASDAQ:HOOD) fell by 6% and 9%, respectively.
This raises questions about the asset’s purported independence.
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A wide array of responses to Portnoy’s query emerged on social media. Some respondents referenced increasing institutional investment, while others highlighted emotional trading behaviors and various technical indicators.
“Bitcoin behaves like a risk asset in the short term because it is the most liquid and available asset around the clock,” commented MicroStrategy Executive Chairman Michael Saylor. “In moments of stress, traders tend to sell what is easily liquidated, rather than what they prefer.”
Logic also played a role in the discourse. “If rent is due, are you more likely to sell Apple stock or your crypto holdings?” one user suggested.
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Another social media user noted, “Boom. Recognizing that significant capital has co-opted Bitcoin and that it has effectively become indistinguishable from the stock market.”
Some comments veered into sarcasm, with remarks like, “Day 1 of the bear market: Portnoy discovers correlation,” and “It was once considered a currency until it was repurposed as a collectible.” Analyst Benjamin Cowen chimed in with, “How can someone your age make such a statement?”
Defenders of Bitcoin’s foundational purpose emerged as well. “Traders are the froth. Hodlers are the foundation,” claimed one. Another emphasized, “Bitcoin has been the top-performing asset over the past 15 years.”
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The recent decline in Bitcoin was magnified against a backdrop of Wall Street struggles with rising inflation concerns and negative consumer sentiment. On the Friday preceding Trump’s “Liberation Day,” the Dow Jones Industrial Average dropped more than 700 points, while the S&P 500 fell 2% and the Nasdaq (NASDAQ:NDAQ) was nearly down 3%.
Trump’s tariff implementation reignited fears of a trade war, and the Atlanta Fed’s GDPNow forecast now suggests a 2.8% GDP contraction for the first quarter, an adjustment from an earlier prediction of -3.7% on April 1.
While Bitcoin has exhibited some resilience compared to equities, it still tends to mimic market movements when panic ensues.
Despite the circumstances, there are proponents who continue to advocate for Bitcoin’s potential as a decentralized hedge against economic turmoil. However, the prevailing consensus remains that Bitcoin is perceived primarily as a risk asset, trading accordingly.
As Portnoy highlights, it increasingly appears that Bitcoin is simply “another element of the system” it once aimed to disrupt—“When markets rise, Bitcoin rises; when markets fall, Bitcoin falls.” Ross Gerber, CEO of Gerber Kawasaki, articulated this sentiment succinctly by stating, “BTC price movements are sentiment-driven. When risk appetite is high, prices rise; when it’s low, prices fall.”
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This article Dave Portnoy Says What Many Are Thinking, ‘If Bitcoin’s Supposed To Be Independent of Dollar, Why Does It Trade Just Like The Stock Market?’ originally appeared on Benzinga.com
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