The Fed held rates unchanged following its latest meeting, citing tariff concerns. Bitcoin stands firmly as the most established risk asset, not only because of its truly decentralized nature but also due to its close parallels with mainstream assets like spot gold or equity indices such as the Nasdaq Composite. This comparison is both valid and significant as Bitcoin continues to redefine the concept of money in connection with traditional financial assets.
Many investors associate cryptocurrencies with high price volatility and technological disruption. Bitcoin is no exception. Although volatility has declined as institutional adoption rises, Bitcoin has often been compared to tech stocks, or more broadly, the Nasdaq. Its dynamic relationship with gold serves as a telling indicator of its store of value narrative, or lack thereof.
The correlation between Bitcoin and Nasdaq, and global equities has been long followed by investors. During COVID, Bitcoin largely followed the direction of the Nasdaq 100. However, recent tariff threats have triggered a decoupling where Bitcoin saw a small jump while the Nasdaq 100 fell after Trump announced tariffs in April. The store of value narrative reappeared as Bitcoin achieved a high correlation with gold at 0.7, surpassing its 0.53 correlation with the Nasdaq 100.
Amid recent rising tensions in the Middle East, the relationship between gold and Bitcoin has once again diverged. As Barron’s reported, Bitcoin “reacted to heightened global tensions in the Middle East, dropping along with other so-called risk assets,” while gold has seen a jump in price.
According to Nick Ruck, director at LVRG Research, “Risk assets will see more volatility and sell pressure as investors flock to safe assets from fear of further escalation and uncertainty about how much more the US will be involved in the conflict, which is also the factor if it’s been priced in or not.”
What’s after gold
The growing integration of Web2 companies into the stablecoin space also highlights the expanding convergence of traditional finance and digital assets. Major fintech and payment firms are increasingly exploring or adopting stablecoins to enhance cross-border transactions, settlements, and treasury management. Meanwhile, commodity-backed stablecoins like Tether Gold (XAUT), which is pegged to physical gold reserves, are gaining traction as a convenient alternative to buying gold financial products.
These developments signal a broader trend of asset tokenization, where both fiat-pegged and commodity-backed stablecoins serve as bridges between conventional finance and decentralized ecosystems, offering investors inflation-hedged alternatives and improved liquidity in digital markets.
“As Web2 giants adopt stablecoins for efficiency and commodity-backed variants gain traction, we’re seeing the early stages of a tokenized monetary system. It’s grown beyond the initial use cases for stablecoins as the gateway to realize gains or flee volatility. Mass institutionalization is changing the liquidity mechanisms across both traditional and decentralized markets,” said Ruck.
Ethereum’s rebound has renewed altcoin market optimism, fueled by institutional inflows (notably spot ETH ETFs) and deregulation. This reflects growing confidence in Ethereum’s role as an institutional hub. A sustained break above $3,000 could trigger a broader altcoin rally, given ETH’s sector-wide influence. The altcoin outlook remains nuanced. Ethereum’s recovery is positive, but the Fed’s delayed rate cuts until at least September may limit liquidity-driven gains for riskier altcoins, which historically underperform Bitcoin in tighter monetary conditions. The performance of altcoins will depend on macro trends and broader crypto momentum.
With contributions from Nick Ruck, Director at LVRG Research.
Yiwei Wang is a passionate blockchain enthusiast who aims to create interesting storytelling at the intersection of crypto, economics, and public policy. He navigated the complex landscape of the blockchain industry with effective financial communications and has worked with various industry leaders and companies.
LVRG Research serves as the research and analysis division of LVRG PR. It delivers data-driven insights on market trends, macroeconomic developments, and industry shifts, with its frequent media presence underscoring its reputation as a trusted source for timely and thought-provoking narratives.
By combining deep industry expertise with tailored solutions, ranging from PR and marketing strategy to analytical research, LVRG Research assists clients in strengthening their visibility across both Web3 and mainstream markets.
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