U.S. Banking System Turmoil Has Spurred Bitcoin Outperformance: Coinbase

Cryptocurrency markets have displayed resilience in the face of recent upheaval in the U.S. banking system, with bitcoin ($BTC) in particular outperforming, Coinbase (COIN) said in a research report Friday.

Coinbase notes that bitcoin has outperformed its digital asset peers since the middle of February, with the cryptocurrency’s dominance as a percentage of total crypto market cap increasing to 47.7% from 43.9% during March. This outperformance accelerated early in the month, which coincided with the onset of the U.S. banking system turmoil, the note said.

“Part of the reason is that the stress in the banking system reinforced bitcoin’s store-of-value properties,” the report said, and because $BTC mainly exists outside of the traditional financial system “it offers a hedge against current conditions.”

It has also benefited from investor concerns about the regulatory status of other cryptocurrencies, analysts David Duong and Brian Cubellis wrote.

Bitcoin’s correlation to the S&P 500 stock index dropped to 25% at the end of March from a peak of 70% in May last year, the note observed.

The cryptocurrency’s relative outperformance versus peers also reflects investor concerns about the regulatory status of other digital assets, and thinner liquidity specific to some $BTC versus stablecoin trading pairs, the report added.

Read more: Bitcoin Has Benefited From U.S. Dollar Liquidity to Support Banks: Morgan Stanley