Bitcoin could enter a new period of outperformance versus traditional assets as inflationary pressures persist and bond markets weaken, according to Mark Connors, chief investment officer of Risk Dimensions.
Connors, who spent years as global head of portfolio management at Credit Suisse, said Bitcoin recently emerged from what was its longest period of underperformance relative to the S&P 500 in history, a 142-day period that ended in early May.
“I think Bitcoin’s underperformance relative to the markets is over,” Connors said in an interview. “It’s in the consolidation phase [that] has entered a phase of outperformance.
The move comes as investors grapple with stubborn inflation, rising oil prices and uncertainty around interest rates. Connors argued that bonds, traditionally seen as defensive assets, are increasingly under pressure as markets adapt to a “higher for longer” rate environment.
“Bitcoin, as always, takes it on the chin early, but then it always comes out first,” he said, adding that Bitcoin could continue to outperform both stocks and fixed income “as we cross the strait of bad news and oil remains consistently high.”
Connors linked much of the current macroeconomic environment to ongoing geopolitical tensions and high energy prices. Oil has remained structurally high this year, he said, fueling inflation fears while forcing markets to look to technology and productivity gains as a counterweight.
He argued that AI and blockchain are increasingly linked as companies seek decentralized systems to support machine-driven transactions and automation.
“The only way to combat this inflationary pressure is through technology,” Connors said.
He also highlighted the shift in investor preferences between gold and bitcoin. Connors compared the current environment to 2020, when gold initially outperformed at the start of the pandemic before bitcoin began a strong resurgence.
“Gold has had its day,” he said. “Bitcoin is now in the midst of a resurgence.”
