Bitcoin decoupling from tech stocks indicates new geopolitical use as economic hedge – StanChart

Section 1: Bitcoin Outperforms Major Tech Stocks

Bitcoin (BTC) demonstrated remarkable resilience on April 3 and 4, outperforming most major tech stocks as the "Magnificent Seven" (MAG7) suffered significant losses. According to Standard Chartered’s head of digital asset research, Geoffrey Kendrick, Bitcoin’s strong performance signals its growing role as a dual-purpose asset, serving as both a growth trade and a hedge against macro risks.

Section 2: Bitcoin’s Performance in Comparison to Legacy Markets

In his April 4 research note, Kendrick highlighted that all seven tech giants were in the red, with Nvidia, Google, and Meta falling nearly 8% or more. In contrast, Bitcoin and Microsoft posted milder declines of around 3%, while Ethereum (ETH) also fared better than most of the MAG7. Bitcoin and Microsoft were the strongest performers, each declining by roughly 3%, with Ethereum following closely behind.

“Strongest performers were MSFT and BTC. Same again so far today in BTC spot and tech futures.”

Section 3: Tech Proxy and Broader Hedge

Kendrick argued that Bitcoin’s strong performance compared to legacy markets in the current market indicates the divergence is not a one-off event. He emphasized that Bitcoin "trades more like tech stocks than it does gold most of the time," suggesting that BTC tends to rise and fall with risk-on assets. However, he also highlighted its utility goes beyond just speculative upside, particularly during moments of structural stress in traditional finance, such as the March 2023 collapse of Silicon Valley Bank, where Bitcoin acted as a hedge, providing investors with an alternative to banking sector exposure. Kendrick categorized this as Bitcoin’s usefulness as a "TradFi hedge."

Section 4: Emerging Use Case – Hedge Against US Isolation

Kendrick believes a new use case is emerging: a hedge against "US isolation." Although he didn’t define the term, it likely refers to increasing geopolitical decoupling, concerns over U.S. economic dominance, or rising de-dollarization narratives. Kendrick further argued:

“Over the last 36 hours, I think we can also add ‘US isolation’ hedge to the list of Bitcoin uses.”

Section 5: Critical Resistance in Sight

Looking ahead, Kendrick noted Bitcoin may be approaching an important technical breakout following the positive US labor market report on April 4. According to Kendrick:

“A break back above the critical $85k level looks likely today, post payrolls. That opens up a move back to the $88.5k pre-tariff level from Wednesday (likely this weekend).”

Conclusion

Kendrick concluded that Bitcoin is proving to be "the best of tech," benefiting when growth stocks rally while also offering defensive characteristics across multiple market regimes. He emphasized the importance of holding onto Bitcoin, especially for long-term believers, with a simple message:

“HODL.”

FAQs

Q: What does Bitcoin’s strong performance signal?

A: Bitcoin’s strong performance signals its growing role as a dual-purpose asset, serving as both a growth trade and a hedge against macro risks.

Q: How did major tech stocks perform in comparison to Bitcoin?

A: Most major tech stocks, including Nvidia, Google, and Meta, suffered significant losses, while Bitcoin and Microsoft posted milder declines of around 3%.

Q: What is Bitcoin’s utility beyond speculative upside?

A: Bitcoin provides investors with an alternative to banking sector exposure during moments of structural stress in traditional finance, categorized as its usefulness as a "TradFi hedge."

Q: What is the emerging use case for Bitcoin?

A: Bitcoin may be used as a hedge against "US isolation," referring to increasing geopolitical decoupling, concerns over U.S. economic dominance, or rising de-dollarization narratives.

Q: What is the next technical resistance level for Bitcoin?

A: Bitcoin may approach an important technical breakout with a break back above the critical $85k level, opening up a move back to the $88.5k pre-tariff level.