Risky Assets and Great Escapes

Risky assets seem to be experiencing the latest in a long series of 'Great Escapes' they've experienced in recent years, even if it's acknowledged that the extent and duration of pain avoidance by geopolitically sensitive markets like stocks, is typically relative, conditional and ultimately unknowable.

Still, the focus in broader markets is very largely on their ongoing price upswing from lows since April 8th, the date when the earliest comments from closely followed analysts emerged, suggesting imminent moderation of ‘Liberation Day’ tariffs. (E.g., ex-JPMorgan strategist Marko Kolanovic, quoted by Bloomberg, here).

Relief, with a large side of uncertainty, lifted the S&P 500 almost 700 points, or around 14% from those lows, by early Friday.

For Bitcoin, an even more signal rebound. CME Bitcoin futures – which settle to the most institutionally adopted benchmark, CME CF Bitcoin Reference Rate (BRR) – had added back some $21,400, or about 28%; to perch within reach of the ‘psychological’ $100,000 barrier by mid-session on Friday.

Meanwhile, our Weekly Index Highlights, covering April 21st to 26th, depicted the continuing bounce of a clutch of large-cap tokens besides BTC, like Ether, Cardano, Chainlink, XRP, and others; with advances of approximately 5%-10% a piece.

Mild reaction

As well as the price revival though, discussion among digital asset practitioners is also coalescing around another observation, specifically about the focal asset, Bitcoin.

As early as April 7th, David Lawant, Head of Research at the leading digital assets-focused prime brokerage, FalconX, was struck by how relatively mild of a tariff impact Bitcoin was having:

“The price reaction in BTC has been mild compared to previous broad market sell-offs. Since the NY market close on Wednesday, BTC is down 8.4%, outperforming for the S&P 500 (-10.7%) and the Nasdaq (-11.4%).

Now compare that to major market drawdowns in recent years:

At the peak of the Japanese Yen carry trade unwind in August 2024, BTC fell 13.5%, while the S&P 500 and Nasdaq declined 3.0% and 3.4%, respectively.
During the regional banking crisis between March 09 and 10 2023, BTC dropped 8.9%, compared to 3.3% and 3.8% for the two equity indexes, although BTC rebounded by over 20% in the following session while the equity indexes stood flat.
Going all the way back to the thick of COVID crash between March 11 and March 20, 2020, BTC sold off 25.2%, while the S&P 500 and Nasdaq fell 20.0% and 17.6%, respectively.”

Excerpt from “Signal versus Noise: What BTC’s Move Amid the Market Rout Reveals” – by David Lawant, Falcon X

Lawant qualifies these comments further in the clip from our CFB Talks Digital Assets podcast, below.