Bitcoin could enter a new period of outperformance relative to traditional assets as inflationary pressures persist and bond markets weaken, according to Risk Dimensions chief investment officer Mark Connors.
Connors, who spent many years as global head of portfolio management at Credit Suisse, said bitcoin recently broke out of what had been its longest stretch of underperformance against the S&P 500 in history, a 142-day period that ended in early May.
“I think bitcoin’s underperformance relative to markets is over,” Connors said in an interview. “It is in the consolidation phase [that] has shifted into an outperformance phase.”
The shift comes as investors grapple with stubborn inflation, rising oil prices and interest rate uncertainty. Connors argued that bonds, traditionally seen as defensive assets, are increasingly under pressure as markets adjust to a “higher-for-longer” interest rate environment.
“Bitcoin, as it always does, takes it on the chin early, but then it always comes out first,” he said, adding that bitcoin could continue to outperform both equities and fixed income, “as we go through the trough of bad news and oil being persistently high.”
Connors tied much of the current macro environment to persistent geopolitical tensions and elevated energy prices. Oil has remained structurally high this year, he said, fueling inflation concerns while forcing markets to look to technology and productivity gains as a counterweight.
He argued that AI and blockchain are becoming increasingly connected as companies look for decentralized systems to support machine-driven transactions and automation.
“The only way to get through this inflationary pressure is through technology,” Connors said.
He also pointed to shifting investor preferences between gold and bitcoin. Connors compared the current environment to 2020, when gold initially outperformed in the early stages of the pandemic before bitcoin began a strong resurgence.
“Gold has had its run,” he said. “Bitcoin is now resurgent.”
