Bitcoin's Identity Crisis

Bitcoin's supply is capped at 21 million coins, a limit embedded in its software and effectively immutable. More than 20 million have already been mined, and the rate at which new coins are created halves roughly every four years, most recently in April 2024. Each halving has so far been followed by a major rally, with the climb to the October 2025 peak being the latest example.

Consequently, Bitcoin's supply is now growing by less than 1% per year, slower than gold, whose above-ground stock expands by around 1.7% annually as mining continues. By that measure, the asset often described as digital gold has become scarcer than gold itself.

This scarcity underpins  more ambitious long-term price targets. Bitcoin's market capitalisation is currently around USD 1.5 trillion, compared with an estimated USD 18–20 trillion for gold. If  Bitcoin were to capture even a tenth of gold's value, its price would approach USD 95,000. A quarter would imply a value closer to USD 240,000. 

This scarcity alone does not determine how an asset behaves in the market. On a day-to-day basis, Bitcoin trades less like gold than like the technology stocks alongside which it increasingly sits in institutional portfolios.

Since the launch of US spot ETFs in January 2024 brought Bitcoin further into the mainstream financial system, large investors have increasingly treated it as another asset class within a broader risk-on allocation. Throughout 2026, Bitcoin's correlation with the NASDAQ remained consistently higher than its correlation with gold. It tended to rise when equities and liquidity were abundant and often fell faster than stocks when risk appetite deteriorated.

In other words, using Bitcoin as a hedge against falling markets often means owning more of the same risk already present elsewhere in a portfolio. The Iran war illustrated this clearly. Bitcoin fell alongside other risk assets when the conflict began, and its recovery in April coincided with a rebound in equities rather than a flight to safety.

Bitcoin's price performance this year has also depended heavily on a relatively small number of buyers. Michael Saylor's company, Strategy Inc., has purchased more Bitcoin in 2026 than the entire mining network has produced and now holds over than 843,000 coins worth more than USD 64 billion. According to one estimate, Strategy alone accounted for roughly 70% of net buying across ETFs, stablecoins and futures.

When a market depends so heavily on a single buyer, it becomes vulnerable if that buyer steps back. This is precisely what happened in late May, when Strategy shifted its focus towards reducing debt.

This concentration is gradually being offset by broader corporate adoption. In recent listing documents, SpaceX disclosed holdings of 18,712 Bitcoin worth around USD 1.45 billion, placing it among the largest corporate holders alongside Tesla and Strategy. Holding Bitcoin on a corporate balance sheet is becoming increasingly commonplace rather than exceptional.

For now, market sentiment remains subdued. Through the end of May, investors withdrew a record USD 2.4 billion from US Bitcoin ETFs, even as the S&P 500 and NASDAQ reaching new highs and despite capital continuing to flow into AI and semiconductor stocks. Perhaps for perhaps the first time in years, an asset that usually benefits from rising risk appetite was being left behind. Some investors interpret this as evidence of exhaustion. Others view it as the kind of capitulation that has historically marked major market lows.

The clearest catalyst from here remains the Federal Reserve. Its new chair, Kevin Warsh, has expressed unusual receptivity to Bitcoin, describing it as an important asset and a useful gauge of confidence in monetary policy. He has also made clear that Bitcoin itself does not concern him. Any policy shift that contributes to a weaker dollar would likely provide direct support for the asset. Otherwise,, the technical level to watch is the 200-day moving average currently around USD 82,000, above which Bitcoin has not recorded a weekly close since October.

It has been a challenging  year for Bitcoin’s oldest investment case: the notion that it serves as a digital form of gold offering protection when other assets decline. In 2026, gold fulfilled that role, whereas Bitcoin largely did the opposite. Instead, the idea that Bitcoin's real distinction is as money that no government can block or freeze gained ground in the Strait of Hormuz. Investors are still debating what Bitcoin is worth. The events in the Strait served as a reminder of its intended purpose.