Bitcoin may be entering a new period of outperformance against traditional assets as inflation pressures persist and bond markets weaken, according to Risk Dimensions chief investment officer Mark Connors.
Connors, who spent years as the 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 versus markets is over,” Connors said in an interview. “It’s in the consolidation phase [that] has shifted into an outperformance phase.”
The shift comes as investors grapple with stubborn inflation, rising oil prices and uncertainty around interest rates. Connors argued that bonds, traditionally viewed as defensive assets, are increasingly under pressure as markets adjust to a “higher-for-longer” 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 outperforming both equities and fixed income “as we grind through the straits of poor news and oil persistently being 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 toward technology and productivity gains as a counterweight.
He argued that AI and blockchain are becoming increasingly linked as businesses look for decentralized systems to support machine-driven transactions and automation.
“The only way to punch through that 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 during the early stages of the pandemic before bitcoin began a strong resurgence.
“Gold has had its run,” he said. “Bitcoin is now on its resurgence.”