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Bitcoin has long perplexed investors with its ability to act as both a store of value and a high risk asset, but Wolfe Research says it’s worth owning either way and to lean into the nuance. There’s been a fog over the price of bitcoin this year. It’s remained in a tight range between $25,000 and $30,000 and fluctuated between acting like a risky tech stock and a type of digital gold. It isn’t the first time bitcoin’s narrative has wavered, and it may be time for traders to embrace the idea that they aren’t mutually exclusive. “A question we have often asked is whether BTC should be treated more like a risk asset or a storage of value such as Gold. The answer in our opinion is both,” Wolfe’s Rob Ginsberg said in a note Wednesday afternoon. “Bitcoin is highly correlated to small caps, a risk asset. That said however, bitcoin only rallied this spring thanks to the banking scare, which saw investors flee to the ‘safety’ of the coin,” he added. “Regardless how you look at it, we think there’s something to be said for how it trades in times of uncertainty.” BTC.CM= 6M mountain $25,000 has been a key support level for bitcoin this year Bitcoin’s first big rally this year took place amid the U.S. regional banking crisis as investors rediscovered the crypto asset’s appeal as an alternative banking system. Though bitcoin was initially designed to be digital cash and an alternative financial system, it spent much of 2022 trading like a speculative asset. Following the closures of Silicon Valley Bank and Signature Bank in the spring, bitcoin’s price action gave the appearance that investors were trading it on its core value proposition, the ability to “be your own bank.” While bitcoin has struggled to reach new highs, plagued by regulatory hostility and uncertainty in the U.S., it has also held steady above its key support level this year, benefiting from several positive developments coming from landmark legal cases and the race to launch the first spot bitcoin ETF. Recently, it briefly dipped below $25,000 before quickly bouncing back. “It is encouraging to see BTC remain resilient in the face of these violent moves lower,” Ginsberg said. “While a significant drawdown from here would likely put pressure on the coin, we still have no problem owning it above 25k support, which continues to act as a floor.” “With strong support below and uncertainty building in the markets, is bitcoin really that bad of an option as it sits here up on the month? We think not,” he said. — CNBC’s Michael Bloom contributed reporting.
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